Stress test results to be released on Thursday

May 02, 2009|Associated Press

WASHINGTON - The Federal Reserve will release results Thursday of "stress tests" for the 19 large banks at the center of the nation's financial crisis. The results will shed light on which banks may need more government support to withstand a severe recession.

The Fed will detail the health of individual banks and provide an overall snapshot, according to a government official who spoke on condition of anonymity because of the sensitive nature of the matter.

The Fed will reveal the extra capital the banks will need in order to absorb possible future losses on investments and loans if the recession were to worsen.

Last week, Fed officials said all 19 banks that underwent stress tests will need to keep an extra buffer of capital reserves beyond what's now required. That means some banks will have to raise more cash.

Banks will have up to six months to raise money from private companies, Federal Reserve chairman Ben Bernanke has said. If they can't, the government would provide aid.

The Wall Street Journal reported yesterday that Citigroup Inc. might need to raise as much as $10 billion to meet the increased standards. A Citigroup spokeswoman said the bank had no comment on the story.