Wednesday, May 6, 2009

An Update on the Stress Tests

US regulators released capital guidelines for the nation's 19 largest financial insitutions under the government's stress test and said banks needing fresh capital will have until June 8 to develop a plan and Nov. 9 to raise the capital.

The eagerly awaited results, which will be released at 5 pm New York time on Thursday, will lay out how much more capital some banks may need to raise to satisfy new stringent capital cushion targets, the US Treasury and bank regulators said in a joint statement late Wednesday.

Banks must ensure that they have tier one risk-based capital ratios of 6.0 percent, and tier one common risk-based capital ratios of 4.0 percent at the end of 2010, under a hypothetical sharper than expected economic downturn, the statement said.

Regulators described the capital as a 'one-time buffer' that will give market participants confidence in the ability of the top banks to continue providing credit to U.S. households and businesses, even if the economy is weaker than expected.

Regulators also said the banks must review their existing management to "assure that the leadership of the firms has sufficient expertise and ability" to manage risk.

Banks seeking to repay U.S. taxpayer bailout funds will have to prove they can maintain the higher capital buffers and can issue debt not backed by government guarantees.

"The U.S. government reaffirms its commitment to stand firmly behind the banking system during this period of financial strain to ensure it can perform its key function of providing credit to households and businesses," the statement said.

The release of the capital guidelines follows a steady stream of leaks to the news media concerning how individual banks may have fared on the tests.

Bank of America needs to close a nearly $35 billion capital gap. Wells Fargo needs $15 billion, while Citigroup probably will require about $5 billion.

Among the banks that will need no additional capital are:

JPMorgan Chase , Goldman Sachs , American Express , Regions Financial and Bank of New York Mellon .

Shares of bank stocks soared Wednesday even as the government told some of the industry's leaders that they'll need to raise billions.
source: CNBC


  1. According to the occasion, wedding could be separated into two styles, formal or traditional wedding and informal or casual wedding. Wedding Dresses should really be fitted for that wedding occasion no matter what sort of occasion you like. There are two examples. For informal summer wedding, it’s great to select island wedding gowns or Beach Wedding Dresses because they are mainly casual bridal gowns. Another example is formal wedding dresses. Perhaps floor-length mermaid wedding gowns are most brides’ favorite. The Mermaid Wedding Dresses are able to make brides more elegant. If you’re planning to possess a formal wedding, mermaid wedding dress on sale provided by our web shop is the best option on your behalf.

  2. I was very encouraged to find this site. I wanted to thank you for this special read.
    Commodity tips
    Stock Market
    Share Market
    Nse Tips
    Bse Tips

  3. Hi there! I just would like to give a huge thumbs up for the nice info you will have right here on this post. I will likely be coming again to your weblog for extra soon.
    Buy Property
    Sell Property
    Invest in Property
    Find real estate agent

  4. I am very much pleased with the contents you have mentioned. I enjoyed every little bit part of it. It contains truly information. I want to thank you for this informative read.
    Intraday Nifty Future Tips || Share market tips || Share and Earn.