Thursday, May 7, 2009
Stress test not so stressful after all
The Federal Reserve determined that 10 U.S. banks need to raise a total of $74.6 billion in capital. The banks include Bank of America, which needs to raise $33.9bn, Wells Fargo ($13.7bn), GMAC ($11.5bn), Citigroup ($5.5bn) and Morgan Stanley ($1.8bn.) "The results released today should provide considerable comfort to investors and the public,” said Fed Chairman Ben S. Bernanke. “The examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario." The adverse scenario's projections are more optimistic than the latest IMF forecasts for US growth, employment and house prices.