April 10, 2009

Bank "Stress Test" Results

Business news today:

Bank "Stress Test" Results

The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.

The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.

“If you allow banks to talk about it, people are just going to assume that the ones that don’t comment about it failed,” said Paul Miller about the stress test results, an analyst at FBR Capital Markets in Arlington, Virginia.

Regulators are using the bank stress tests to determine whether the 19 biggest banks have enough capital to cover loan losses during the next two years if the economy shrinks, unemployment surges and housing prices keep declining. The tests are a linchpin of the plan Treasury Secretary Timothy Geithner announced in February to bolster confidence in the nation’s banks and restore financial-market stability. Geithner has likened the stress tests to those used by doctors to evaluate a patient’s health...

Bank "Stress Test" Results

Posted at April 10, 2009 12:03 PM