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Bank Stress Test Results Delayed, Some Lenders Looking to Make up Deficits

Regulators were supposed to release the findings of their stress tests on the nation's largest lenders today, May 4, but the Federal Reserve is postponing the public announcement until later this week, presumably Thursday. The delay came after a number of the institutions who got a sneak peek last week disputed regulators' conclusions and voiced concern that the disclosure would negatively impact stock prices - all probable signals that more than a few of the 19 institutions tested will be ordered by the government to find more cash.
Bank of America and Citigroup are among those institutions who may be told they need to pad their balance sheets. Preliminary reports suggest that BofA and Citi, both of which have already received multiple government bailouts, will need at least $10 billion each to satisfy regulators' demands.
According to a _""Financial Times"":http://www.ft.com/cms/s/0/4843a178-3824-11de-9211-00144feabdc0.htmlxnclick_check=1_ report, the two companies have embarked on a frenzied campaign this week to try and raise fresh capital in anticipation of stress test mandates. Executives at Citi are said to be considering a plan that would force the holders of $15 billion in trust preferred shares to convert to common stock. _FT_ says Citi may withhold the interest it pays on these securities to force shareholders' hands.
Wells Fargo and PNC Financial are also reported to be on the list of institutions lacking capital.
Treasury Secretary Timothy Geithner has emphasized that none of the banks examined are unsound, and a senior government official familiar with the test results told the _""New York Times"":http://www.nytimes.com/2009/05/04/us/politics/04stress.htmlx_r=2&ref=business_ over the weekend, ""None of these banks are insolvent. These are manageable losses.""

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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