Stress test: Banks need to raise $74.6 billionPosted on
The federal government ordered 10 of the nation’s biggest banks to raise a combined $74.6 billion in capital as a cushion, after stress-test results showed potential losses of up to $599 billion through the end of next year if the economy performs worse than expected.
The Federal Reserve’s worst-case estimates of total losses and capital shortfalls were smaller than some had feared, according to a report in the Wall Street Journal. The stress tests measured potential losses on mortgages, commercial loans, securities and other assets held by the tested banks.
Treasury Secretary Timothy Geithner said he is “reasonably confident” banks will be able to plug the capital holes through private infusions without Washington further involving itself in the banking system, according to the report.
Banks also said they will consider selling businesses or issuing new stock to meet the toughened capital standards.
Click here for a WSJ report on how the stress tests have affected the market.