Tuesday, April 7, 2009

Bank Stress Test Results Delayed For Earnings

By: Reuters | 07 Apr 2009 | 01:27 PM ET
Text Size

The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury's discussions said Tuesday.

Treasury Seal
woodleywonderworks
Treasury Seal

The Treasury is still talking about how results of the regulatory stress tests on the 19 largest U.S. banks will be released, and may disclose them as summary results that are not institution-specific, the source said.

The government is testing how the largest banks would fare under more adverse economic conditions than are expected in an attempt to assess the firms' capital needs.

The tests are due to be completed by the end of April, but Treasury has said they may be finished before then.

The source, speaking anonymously because the Treasury has not made a final decision on what to disclose, said officials do not want any test results released before the earnings season wraps up for most U.S. banks on April 24.

Treasury did not immediately respond to a request for comment.

U.S. regulators have reached the closing phase of the stress tests, with many of the top banks having already turned in their internal versions of the test to officials. Bank of America[BAC  7.36    -0.12  (-1.6%)   ] Chief Executive Kenneth Lewis said last Thursday that his bank has already completed its test.

Bank regulators are at the stage of reconciling their own versions of the results with the banks' internal assessments.

Officials realize it may be hard to keep the results under wraps, and they are looking for ways the banks could disclose some details without unduly disturbing the markets. They are also looking at providing some summary information about how the banks fared.

"There will be definitely be some information that will be provided at the end of it, but exactly what that will be, and when it will be provided, will come forth later," Comptroller of the Currency John Dugan, who supervises some of the nation's largest banks, said last week.

The stress tests at the biggest banks are part of a wide-ranging effort to restore stability to a sector hit by huge mortgage-related losses.

The tests are designed to determine the depth of banks' capital holes if conditions deteriorate further. After the tests are completed, the banks will have six months to either raise private capital to compensate, or accept government funds.

But officials are worried about how the market will react to the stress test results if there is not a clear recovery path for a bank that is deemed to have a large capital need. The last thing Treasury wants to do is set off a panic, the source said.


Comments:

The Treasury has decided to hide the results of their inane bank stress tests. Obviously, that is not good news. Watch out below ..And, the clown/Cramer still seems bullish..That can only mean that the DOW goes back to 6500..The cheerleaders on the atrocious CNBC are hard pressed to find any positives to get all hyped up about. Although, one talking head actually rejoiced when the DOW cut its losses from 175 down to 158 earlier in the day. 
How pathetic is GE, CNBC, and the god-awful MSNBC - Why can't the world get rid of these channels and Jeff Immelt as well ? 



No comments: