Official stress tests results revealed, contain few surprises
Filed under: Economy
The results of the stress tests are in and, as expected, 10 of the 19 biggest U.S. financial institutions need to raise capital, including big national banks like Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) and regional banks such as Regions Financial (RF), SunTrust (STI) and Fifth Third (FITB).What is a little surprising is the total amount of capital regulators believe the financial system needs to raise to ensure it can survive a recession that lasts through next year: $74 billion. Some analysts have estimated a deep, long-lasting downturn could mean banks would need to raise as much as $1 trillion, many times that much.
American Express (AXP), Bank of New York Mellon (BK), BB&T (BBT), Capital One (COF), Goldman Sachs (GS), JPMorgan Chase (JPM), MetLife (MET), State Street (STT) and US Bancorp (USB) won't need more capital, the Fed said.
Regulators estimated the banks could suffer losses as high as $599 billion through next year if the economy deteriorates further, according to the stress tests' results.
Expect at least a few of the banks cleared today to announce plans to return the money they received under the Troubled Asset Relief Program, or TARP. JPMorgan, which received $25 billion, and Goldman Sachs, which got $10 billion, have made no secret of their desire to repay those funds soon as possible. And both have shown there's demand for their bonds in the corporate debt market, a key sign regulators want to see before letting them exit the program.
As a bond analyst with the research firm Gimme Credit wrote in a note to clients today, "Goldman Sachs and JPMorgan will get to lord their superiority over everybody else yet again."
Between the markets closing at 4 p.m. and the announcement of the stress test results an hour later, Morgan Stanley said it would sell $2 billion in stock and $3 billion in bonds and Wells Fargo said it would $6 billion in stock. The moves could help the banks meet their new capital requirements; Morgan Stanley needs to add $2 billion in capital and Wells Fargo must raise $13.7 billion.
But it isn't just the giant banks eager to prove their health by repaying the government's bailout funds. BB&T could move quickly now that the stress tests are past. The North Carolina-based regional bank has long been seen as stronger than many of its peers and it, too, has been able to sell bonds without a government guarantee.
Why 10% jobless rate means misery for many, buying opportunity for some
Walmart slams lid on customers' creepy online reviews of its caskets
Just how dangerous are stimulus-driven deficits in the long run?
Reader Comments (Page 1 of 1)
5-07-2009 @ 6:33PM
Monique said...
Well, on the news tonight , they said, that the banks won't take on the taxpayers money to raise the money. Yeah right, my bank already sent me 3 letters regarding, that they will be charging $10.00 for each transaction starting in June.
Reply
5-07-2009 @ 6:34PM
cmorse1052 said...
So when they pay the TARP monies back with interest, when can I expect my check?
Reply
5-07-2009 @ 6:38PM
jsmith said...
Read between the lines...those 10 banks are now going to jack up credit card and account fees to levels that would make ken lewis blush!
Reply
5-07-2009 @ 8:00PM
bagofdounuts said...
Were is the people bail out money ??? 13.00 dollars a week in pay check don't cut it....Drop the tax rate on fed. with holding in pay check will help the working people...
Reply
5-07-2009 @ 9:37PM
ERNEST said...
MORE MONE FOR BANK AND THE TREASURY IS PLANNING NO INCREASE IN SOCIAL SECURITY FOR OVER 50 MILLION PEOLPE IN USA THAT DEPENDS ON THIS ONLY INCOME..............MY GOD!!!! HELP THE ELDERY...NOT THE MILLONAIRES!
Reply
5-07-2009 @ 9:38PM
teltech54 said...
10 of 19 banks did not pass the stress test. There are over 8000 banks in the US. Does this mean there are 4000 banks that would not pass the stress test? I don't know about you but this doesn't sit well with me. What is the government hiding? Why does AOL keep deleting my usernames and I have to create new ones after posting these types of questions? Does the government not want what I say told? Anyone else have this problem? Something smells of a cover up.
Reply
5-07-2009 @ 11:52PM
Sarah said...
I didn't read this article..for all the advancements that led to this situation, there's just a simple thought....Not everyone is entitled to the same lifestyle. This is what happens when they think they are.
Reply
5-08-2009 @ 12:20AM
Sarah said...
Finally easy credit has come home to roost; I can't wait till they can't have what they love the most anymore...too bad they need to be controlled unlike me who can control myself.
Reply
5-08-2009 @ 12:24AM
Sarah said...
Easy credit also contributed to such high expectations. People were more in love with a lifestyle and materialism then any other person. Now they've been divorced from it by force....oh, that's so sad....NOT
Reply
5-08-2009 @ 12:26AM
Sarah said...
They have no chips to cash in with the love of their life.
Reply
5-08-2009 @ 12:29AM
Sarah said...
Their fancy vehicles aren't going to save them, their homes aren't going to save them, the only thing that would have saved them is what they avoided the most....saved money and another person.
Reply
5-08-2009 @ 12:42AM
Sarah said...
I know why people want to be wealthy; it's about being "known"...we have no more community in certain areas, maybe all, anymore except the community of money. So if they are wealthy, they become a somebody. The more they GET, they more the ARE. Men who want women to walk in with certain finances and careers don't even KNOW the person, but yet they EXPECT this, and they didn't contribute to them getting this way, they just want it HANDED to them for doing NOTHING.
Reply
5-08-2009 @ 12:46AM
Sarah said...
And now that it can't be so easily had, HAAAA HAAAAAA! And try getting a free cow now when they finally are forced to get what's going on.
Reply
5-08-2009 @ 12:48AM
Sarah said...
This is the best thing that's ever happened to such people.
Reply
5-08-2009 @ 12:51AM
Sarah said...
They're just going to adjust once again. And this time, as last time, it won't pay to be too smart for your own good, and btw...this means you aren't too smart or you would have benefitted. So aware of what could be had out there, and so ill equipped to obtain it on solid terms....and yet wanting it more then anything.
Reply
5-08-2009 @ 12:57AM
Sarah said...
A friend isn't someone who you don't know whom you can network a job or a paycheck out of.
Reply
5-08-2009 @ 1:09AM
Sarah said...
Their real person is before that all happened....I know, some don't think this has money attached to it and don't waste their time, but that's where the heart of everything is. If you can't make that connection, you'll never know them, and you'll never know how to get what you want, nor should you, and for someone who can, that's not what they're after.
Reply
5-08-2009 @ 1:20AM
steve said...
I have been seriously blessed with this new twitter ads deal I got.
When money is tight u can always go online.
http://twtad.com/index.php?id=9628
Reply
5-08-2009 @ 1:22AM
ssteven said...
I have been seriously blessed with this new twitter ads deal I got.
When money is tight u can always go online.
http://twtad.com/index.php?id=9628
Reply