U.S. May Soon Release Bank Stress Tests

The Obama administration is working on plans to disclose the results of financial "stress tests" undergone by the nation's 19 biggest banks, according to a New York Times report Wednesday.

The move comes earlier than anticipated and is designed to soothe nervous investors who might otherwise avoid banks thought to be the weakest.

The stress tests are supposed to gauge a bank's financial health, specifically whether it has enough cash on hand to weather a continued economic downturn. Banks without enough capital could get more federal funds to meet their needs.

Last week, the Federal Reserve ordered banks to keep the test results a secret, as government officials expected to formally release the results later this month. As the Times points out, the government usually does not disclose results of bank evaluations for fear of sending investors and depositors fleeing.

But Goldman Sachs' recently announced plans to raise $5 billion in capital to pay back government bailout funds - a move suggesting executives are confident in their own test results - has pressured other banks to follow suit or risk looking weak, the Times reports.

"The purpose of this program is to prevent panics, not cause them," an unnamed senior official told the Times. "And it's becoming clearer that we and the banks are going to have to explain clearly where each bank falls in the spectrum."

The government may now ask banks to release some of the information likely to come out in the results, such as how much capital they would require to survive specific hypothetical crises.

According to a Treasury Department official, the stress tests are still underway, so any released information may not provide a complete picture.

The financial markets seem to be stabilizing in recent weeks. Goldman's announcement Monday of $1.66 billion in profit for the last quarter followed Wells Fargo's surprise revelation last week that they turned record profit during the same period.

Citigroup and Bank of America have also signaled positive results for the quarter. The financial sector has bolstered Wall Street recently, as rediscovered investor optimism has advanced the Dow Jones industrials more than 20 percent in the last five weeks.

[emperorlotku]

The disgusting part of this is that if you do the math that means these firms spent 500.000.000.00 a year over ten years, which if we have approx. 500 senators and representatives, that's 1,000,000.00 per politician per year to purchase their corporate owned legislators, Both Republican and Democrat corporate owned legislators. ..
" A group called Wall Street Watch is out with a report that finds that ?Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made $1.7 billion in political contributions and spent another $3.4 billion on lobbyists?"
Posted by pepperwood2 at 11:37 AM : Apr 15, 2009
+ report abuse + permali

[PVperson2]

mortar29, I read the news every day and I have NOT read an article that says "Obama won't let banks repay TARP', who's your source? Oh, I forgot, you have that tinfoil hat...................

[PVperson2]

Gee, if the economy is recovering and the worst is over, do you think the neo-cons will give Obama credit or just keep on carping? Why do I even ask, we all know the answer, the GOP only knows complaint and refusal to face reality.

[bhuddaflii]

and i guarantee u that the books r cooked. if you believe anything this corrupt banker/gov't tag team has to say, then... u deserve everything u get.

[whitemale08]

The illegal Federal Reserve System is bankrupt and needs to be shut down IMMEDIATELY!

How in the hell is Treasury supposed to trust an independent self preservant entitiy like the Fed to be honest about so-called 'stress tests'?

How is Goldman Smacks, JP Morgan and Bank of America going to be honest when they have trillions and trillions of worthless toxic derivatives and credit-default swaps on their books?

HOW?

CALL CONGRESS AND SAY 'NO MORE BAILOUTS'!!!!

[pepperwood2]

Why this can't be happening? Wait until BO & Congress find out? They'll be replacing another batch of CEO's. The nerve of these Banks. How can they get away with this under the noses & watchful eye of the President & Congress? Why you would think they're in this thing together. Charging excessive fees & charges along to the consumer so they can pay off their debt. Why we'll show them. We'll just go out an borrow more to run our personal debt up to help them out. cackle cackle cackle. Fooled you twice.

A group called Wall Street Watch is out with a report that finds that ?Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made $1.7 billion in political contributions and spent another $3.4 billion on lobbyists?

[gmarker3]

So the Fed has forbidden the banks from talking about the stress tests. The Fed will decide what information, results, and spin they want the public (investors) to be spoon fed. Love that transparency from the Obama administration. My investments will go only to banks that refuse TARP funds.

[jxknowles]

My guess is all the entities that received TARP money will fare reasonably well. That would be good news. I'll be interested to see the actual amount of Federal funds that were lost or not repaid.

[rickwar98]

And, they are doing a bang up job bankrupting us, our children, our grand children, etc,etc
Posted by janem4 at 8:05 AM : Apr 15, 2009

Know how many times we've heard this? Too many, right from the start of the US.

[rickwar98]

Bill Clinton (democrat) started this whole mess with Fannie Mae & Freddie Mac.....It just snowballed from there, and here we are in a mess started by the Democraps......So, seriously 121, do you really know where you are coming from?
Posted by willow0313 at 9:02 AM : Apr 15, 2009

Oh, Bulls**T