"At Least" Six Banks Said to Need Additional Capital According to "Leaked" Bank Stress Test Results





treasury department buildingBloomberg.com is reporting tonight that "at least" six of the 19 largest U.S. banks will require additional capital, based on the "preliminary results" of the government stress tests.

Is it just me, or is there a new "leak" every day?

At first there was a "leak" that reportedly had all 19 of the banks passing the government stress tests.

Then, another "leak" had just one of the 19 banks needing additional capital (this bank was widely reported to be Citigroup).

Then, a third "leak" had both Citigroup and the Bank of America needing additional capital.

Now, a fourth "leak" is being reported by Bloomberg.com, and this has "at least" six of the 19 banks needing additional capital.

I mean, what is going on here?

What are the true results?

Who is "leaking" this news?

As mentioned, this latest "leak" of the stress test results has "at least" six of the banks needing additional capital. Will more than six of the banks end up needing additional capital? Using the words "at least" tells me that there could very well be more than six banks..

The stress tests are designed to assess whether or not the largest US banks have sufficient amounts of capital in two separate scenarios - a "baseline" scenario, and an "adverse" scenario.

The "baseline" scenario analyzes whether or not a bank is sufficiently capitalized given a 2% decline in GDP in 2009, an 8.4% unemployment rate in 2009, an 8.8% unemployment rate in 2010 and a 14% drop in home prices in 2009.

The "adverse" scenario calculates whether or not a bank is sufficiently capitalized given a 3.3% decline in GDP in 2009, an 8.9% unemployment rate in 2009, a 10.3% unemployment rate in 2010 and a 22% drop in home prices.

I can't wait until the "real" results are actually released, because this is getting just a bit ridiculous.

Source: Bloomberg.com - Fed is Said to Seek Capital for at Least Six Banks After Tests




Filed under: General Market News

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