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Bank stress test results call for action
Pedestrians pass a Bank of America branch in Chicago, Ill.
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Steve Chiotakis: Seems we've been hearing a lot about these stress test results that are set to be made public today. After the stock market closes, and with full knowledge that a digestion period will be necessary. The idea of the tests, of course, was to ensure the nation's largest banks could handle the worst of the economic fallout. But given the porous nature of our nation's capitol, the news is somewhat anti-climactic. From Washington, here's Tamara Keith.
Tamara Keith: The news has been drip, drip, dripping out for days. Bank of America will need $34 billion. Wells Fargo, Citibank and others will need to raise substantial cash. Chase and Goldman handled their spin on the financial treadmill just fine.
Well today, it's out with the unconfirmed reports and in with the official results. And Scott Talbot with the Financial Services Roundtable, an industry group, says banks will be jumping to action:
Scott Talbot: You know you can't say bank X will need $5 billion, thank you good night. They have to then say here is our plan for raising that capital.
He says they've been working on those plans for a while, and will have something to say in the hours after the results are released.
Talbot: Even if it's an outline to show that they are on top of it, they're planning ahead, you want to end on a positive note.
Banks told they need a bigger buffer will have six months to raise the capital.
In Washington, I'm Tamara Keith for Marketplace.
WIth the sheer number of toxic assets that these banks have to contend with, I find it very hard to believe that they will ever really dig themselves out of the hole. At this point the only positive news I can really see in the banking industry are the new banks that are rising from the ashes, trying to start fresh and do it better this time. There is a new green bank coming to my area, e3bank, that seems to have a solid, triple bottom line plan, that could help them to avoid the mistakes of their predecessors. After everything that has happened, I am ready to scrap the old guard and see what the new guys can do.
