Fed’s Bernanke says stress test results should ‘comfort’
Federal Reserve chief Ben Bernanke said that the results of stress test results today - showing 10 banks need $75 billion in additional capital - should give comfort to investors and the public about the ability of banks to weather an even more adverse economic situation than the nation is facing.
The test was meant to discover how much of an additional capital buffer, if any, banks needed. The Fed says supervisors expect 10 of 19 banks tested to raise additional capital or change the composition of their capital. Much of the need is for Tier 1 Common equity.
“These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards,” Bernanke said.
“The results released today should provide considerable comfort to investors and the public. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months,” he added.
“However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn.”
The results suggest financial crisisâ€related losses at these firms, if the economy were to follow the more adverse scenario, could total nearly $950 billion by the end of 2010.
Top 10 Bank Needs for New Capital
Bank of America Corp., $33.9 billion
Wells Fargo & Company $13.7 billion
GMAC LLC $11.5 billion
Citigroup Inc. $5.5 billion
Regions Financial Corp. $2.5 billion
Sun Trust Banks, Inc $2.2 billion
Morgan Stanley $1.8 billion
Keycorp $1.8 billion
Fifth Third Bancorp $1.1 billion
PNC Financial Services Group, Inc $600 million
No additional capital needed:
Bank of New York Mellon Corp.
Capital One Financial Corp.
The Goldman Sachs Group, Inc
JPMorgan Chase & Co.
State Street Corp