Tags: banks | quiet | stress | tests

Banks Asked to Keep Quiet on Stress Tests

Friday, 10 Apr 2009 07:58 AM

WASHINGTON -- The U.S. Treasury Department is asking banks not to mention the regulatory "stress tests" as part of their first-quarter earnings results, according to a source familiar with government discussions.

Many of the top 19 U.S. banks who are undergoing regulatory stress tests have already completed internal versions of the examinations, which are designed to determine their capital needs under more adverse economic conditions.

However, the banks do not yet know the results of the government's version of the assessment, the source said.

U.S. President Barack Obama is meeting on Friday with top financial regulators to discuss the stress tests, the results of which are anxiously anticipated by financial markets. Officials have said they will release the results in some form by the end of April.

Most major U.S. banks will have reported their first-quarter results by April 24.

The source said the desire to keep the stress test results under wraps will be discussed at the meeting on Friday.

Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp Chairman Sheila Bair are scheduled to attend the meeting, as well as top White House economic adviser Larry Summers, U.S. Securities and Exchange Commission Chairman Mary Schapiro, and U.S. Comptroller of the Currency John Dugan.

The regulators are expected to brief Obama on the progress of the stress tests, and discuss what next steps may be necessary after the tests.

In an attempt to assess banks' capital needs, the government is testing how they would fare under more adverse economic conditions than are expected. The markets are anxiously anticipating the results to see which firms get a clean bill of health and which firms will likely need more taxpayer help.

Some of those market fears were soothed on Thursday when Wells Fargo & Co, the No. 4 U.S. bank, said it expected to post a record $3 billion first-quarter profit, causing its shares to soar 31.7 percent and lifting other bank stocks.

Once the stress tests are finalized and the capital needs are determined, banks will have six months to raise capital in the private market or could take an infusion of government funds.

The government plan to use public-private investment funds to soak up the banks' toxic assets will be another recovery program available to those banks in need.

Officials are still discussing how to release the results of the stress tests, and the decision will likely be made by the Treasury, a source familiar with official talks said.

The source said officials are aiming to release them in some form at the end of April after the first-quarter bank earnings season is over, and are trying to be sensitive to financial market reaction.

© Thomson Reuters 2009 All rights reserved


Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

McCain: 'I Will Not Stand for Cowards and Bullies'

Saturday, 31 Jan 2015 19:23 PM

Sen. John McCain, who threatened to have Code Pink protesters arrested as they confronted 91-year-old former Secretary o . . .

KT McFarland: Raise $200 Million 'Bounty' to Kill Terrorists

Saturday, 31 Jan 2015 18:33 PM

The reported beheading of Japanese journalist Kenji Goto means it's time to seize the momentum in dealing with terrori . . .

Rep. Ed Royce: Keep Gitmo Open Until War With Taliban Ends

Saturday, 31 Jan 2015 17:20 PM

The Guantanamo Bay prison should remain open until the struggle with the Taliban is over, Rep. Ed Royce, who chairs the  . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved