WASHINGTON - Bank stress tests should be repeated if the U.S. unemployment rate rises beyond levels assumed by regulators in a recent round of examinations that provided relief to markets, according to a report released by a bailout watchdog panel on Tuesday.

The Congressional Oversight Panel said in the report that the stress tests should also be repeated periodically as long as banks continue to hold "appreciable amounts" of amounts of toxic assets.

The monthly report from the panel, led by Harvard Law School Professor Elizabeth Warren, said the stress tests, ordered by the U.S. Treasury Department for the top 19 U.S. bank holding companies, used a risk-modeling approach that on the whole was "reasonable and conservative."

But the panel noted that it is impossible for an outside party to replicate the loss projections that form the core of the tests.

It noted, however, that the "more adverse scenario" assumption for the U.S. unemployment rate in the tests for the has nearly been met so far in 2009.

The May unemployment rate of 9.4 percent pushed the average for the year to 8.5 percent, not far from the 8.9 percent assumed.

"We recommend that Treasury publicly track the status of its stress test macro-economic assumptions (unemployment, GDP, and housing prices) and repeat the stress test if the adverse scenario assumptions have been exceeded," the panel said in the report.