Some of the nation’s largest banks will be scrambling to demonstrate that they can raise capital after results of government stress tests leaked out, showing many need more funds. The Treasury Department will officially release results later today. The tests were designed to gauge whether any of the nation’s 19 largest banks would need more capital to survive a deeper recession. It turns out many of the banks do: Wells Fargo & Co., Citigroup and Bank of America have all been told by regulators they will need billions more. The public nature of the assessments and today’s planned announcement raised questions among some critics about whether the findings will reflect the banks’ actual conditions.
The tests put banks through two scenarios: one that reflected expectations about the current recession and another that envisioned a recession deeper than what analysts predict. Citigroup will need to raise about $5 billion, according to a government official briefed on the results who spoke on the condition of anonymity because he was not authorized to talk about the matter. Earlier news reports had put that dollar figure closer to $10 billion. Regions Financial Corp. will also need to raise more money, according to people briefed on the results, as will Bank of America and Wells Fargo. In all, the Wall Street Journal said at least seven of the banks will need a combined $65 billion. The entire group that is deemed to need more capital will require less than $100 billion combined, according to the New York Times.
