May 7, 2009 12:37 AM
- Text
Report: At Least 3 Banks Pass Stress Test
(CBS/AP)
The results won't officially be made public until tomorrow, but there's word that at least three of the nation's 19 largest financial institutions have passed government stress tests.
According to people briefed on the results, American Express, JPMorgan Chase and Bank of New York Mellon will not be asked to raise more capital.
The names of at least three who will be asked to do so are also circulating. Sources tell The Associated Press that Citigroup, Bank of America and Wells Fargo are on that list.
In all, analysts expect about half the companies will be asked to raise capital.
The stress tests are a centerpiece of the Obama administration's plan to stabilize the financial industry. They're designed to measure how the large banks and finance companies would fare if the unemployment rose to 10.3 percent and home prices dropped an additional 22 percent.
The government wants the firms to have enough money to keep lending even if the economy gets much worse. Officials have said none of the banks will be allowed to fold.
Meanwhile, banks that want to pay back their federal bailout funds and free themselves from government restrictions on compensation and dividends will have to sever their ties to another financial assistance program, officials said.
Financial firms eager to return infusions from the $700 billion Troubled Asset Relief Program will have to demonstrate that they can operate without debt guarantees provided by the Federal Deposit Insurance Corp., a senior government official said Tuesday. The FDIC program allows financial institutions to borrow money at lower costs.
The new requirement will make it harder for some institutions to get out from under government rules attached to the bailouts, another shift in a changing landscape for banks. It also illustrates the government's desire not to have banks abandon the bailout program if they are not financially prepared to do so.
According to people briefed on the results, American Express, JPMorgan Chase and Bank of New York Mellon will not be asked to raise more capital.
The names of at least three who will be asked to do so are also circulating. Sources tell The Associated Press that Citigroup, Bank of America and Wells Fargo are on that list.
In all, analysts expect about half the companies will be asked to raise capital.
The stress tests are a centerpiece of the Obama administration's plan to stabilize the financial industry. They're designed to measure how the large banks and finance companies would fare if the unemployment rose to 10.3 percent and home prices dropped an additional 22 percent.
The government wants the firms to have enough money to keep lending even if the economy gets much worse. Officials have said none of the banks will be allowed to fold.
Meanwhile, banks that want to pay back their federal bailout funds and free themselves from government restrictions on compensation and dividends will have to sever their ties to another financial assistance program, officials said.
Financial firms eager to return infusions from the $700 billion Troubled Asset Relief Program will have to demonstrate that they can operate without debt guarantees provided by the Federal Deposit Insurance Corp., a senior government official said Tuesday. The FDIC program allows financial institutions to borrow money at lower costs.
The new requirement will make it harder for some institutions to get out from under government rules attached to the bailouts, another shift in a changing landscape for banks. It also illustrates the government's desire not to have banks abandon the bailout program if they are not financially prepared to do so.
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