Bernanke Defends Bank Tests as a Confidence Builder
By THE ASSOCIATED PRESS – NYTimes.com
Published: May 11, 2009The Federal Reserve chairman, Ben S. Bernanke, on Monday defended the rigor of the government’s stress tests of the nation’s 19 largest banks, saying that the results should bolster Americans’ battered confidence in the banking system.
The much-anticipated results, released last week, showed that 10 banks, including Bank of America, Wells Fargo and Citigroup — must raise a total of $75 billion in new capital to absorb potential losses in a worst-case recession.
The remaining nine, JPMorgan Chase and Goldman Sachs Group among them, had enough capital to withstand a deeper recession.
“We hope and expect that the public and investors will take considerable comfort from the fact that our largest financial institutions have been evaluated in a comprehensive and rigorous fashion,” Mr. Bernanke told a Fed conference on financial markets at Jekyll Island, Ga.
The tests helped to push prices of bank stocks higher on Friday. However, that rally fizzled Monday as bank shares dragged the market lower.
Regulators determined that four of the banks, U.S. Bancorp, Capital One Financial, BB&T and Bank of New York Mellon, were sound enough to survive a deeper recession. Those institutions announced Monday that they planned to issue stock to help repay money the government lent last year to shore up the banking system.
Bernanke Defends Bank Stress Tests – NYTimes.com.
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