Fallout: The Financial Crisis

Bank stress test results call for action

Marketplace Staff May 7, 2009
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Fallout: The Financial Crisis

Bank stress test results call for action

Marketplace Staff May 7, 2009
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TEXT OF STORY

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.

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