Federal regulators plan to discuss the results of stress tests of the top 19 U.S. firms, designed to test the big financial institutions' ability to survive a much deeper economic downturn, government officials say.

The Federal Reserve and other banking regulators--including the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision--are expected to release a white paper April 24 that would reveal how regulators went about assessing the firms' health, including assumptions about the losses firms could face for loans and securities under different economic scenarios.

The controversial stress tests, partly because of Treasury's reluctance to reveal just what regulators are looking at and where the money will come from if future capital injections are needed, have led to the view that they were a tool to force banks into putting up for sale the so-called toxic assets clogging their balance sheets.

The Treasury recently announced a parallel bank-rescue program in which the government would provide money to subsidize private investors who'll purchase the assets, which currently have few buyers.

Regulators are increasingly focusing on the quality of loans the companies made after finding wide variations in underwriting standards. Following revelations of a wide variation in standards for mortgages and other loans, supervisors concluded that banks' lending practices would need to be given as much weight as macroeconomic scenarios. The expanded criteria for the assessments will allow regulators to identify how much of each bank's vulnerabilities were the result of the economic downturn, and how much stem from bad management decisions.

On May 4, the government plans to release some results of the tests themselves, a delicate task considering the fact that banks perceived to be weak could see how investor and customer perceptions of their health could affect their operations.

The March 2008 failure of investment bank Bear Stearns was followed by the flight of investors of the next weakest bank, Lehman Brothers, which subsequently failed in September-- a month that saw weak institutions such as Wachovia and Seattle-based thrift Washington Mutual being merged into other institutions.

However, officials are debating how much information to provide about specific firms, but they are at least expected to say which firms need to raise capital and how much. If regulators determine that a bank lacks sufficient capital, it'll get six months to seek private capital or get additional investments from the Treasury at the cost of the government taking an ownership stake.

The banks will be able to respond to the conclusions reached by federal regulators from April 24 and May 3.

Although regulators frequently examine the banks, the current stress tests launched by Treasury Secretary Timothy Geithner are designed to evaluate what would happen to bank balance sheets in gloomy scenarios where the unemployment rate reached 10.3 percent.

Geithner indicated that the health of individual banks, wary of government strings tied to bailout funds and looking to repay the money, won't be the sole criterion for whether financial firms will be allowed to repay bailout funds, a position that might complicate their efforts to give back the cash.

Geithner also said he plans to discuss signs of improvement in the U.S. economy with his counterparts at the coming Group of Seven (G-7) finance-ministers meeting. But he said a dramatic mobilization of resources is still needed across the world to avert a deeper global recession.

We're trying...to make sure there's as strong and broad a global consensus on stimulus, financial repair and quick deployment of resources to emerging economies so that we can avert risks of a deeper downturn world-wide, he said.

Officials worry that the repayment of bailout money, combined with a general disinclination toward partnering with the U.S., could undermine their efforts to restore health to the financial sector and the broader economy.

On Sunday, President Barack Obama said that the U.S. economy was still not out of the woods but he would make sure that taxpayer money was not dumped into a black hole through financial bailouts.

The president said the stress tests being conducted by his economic team will show that some firms need more help than others. Different banks were in different situations and they would need different levels of assistance from taxpayers, Obama said, as he vowed that taxpayer money would not be wasted.

We try to use as light a touch as we can. But I am not going to simply put taxpayer money into a black hole, where you are not going to see results, he said.

Obama said the U.S. economy still remained under strain despite the massive economic bailout, and his top economic advisor was hoping for a speedy recovery that had driven the stock market to successive gains.

The main challenge for the U.S. economy is to restore confidence that its banks are now sufficiently capitalized after huge losses from the collapse of the housing market. The massive injection of taxpayer money to protect the financial sector has evoked sharp criticism from the public for bailing out rich bankers.

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