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The U.S. Treasury Department is asking banks not to mention the regulatory "stress tests" as part of their first-quarter earnings results, according to a source familiar with government discussions.
Many of the top 19 U.S. banks who are undergoing regulatory stress tests have already completed internal versions of the examinations, which are designed to determine their capital needs under more adverse economic conditions.
However, the banks do not yet know the results of the government's version of the assessment, the source said.
U.S. President Barack Obama is meeting on Friday with top financial regulators to discuss the stress tests, the results of which are anxiously anticipated by financial markets.....
.....Officials are still discussing how to release the results of the stress tests, and the decision will likely be made by the Treasury, a source familiar with official talks said.
The source said officials are aiming to release them in some form at the end of April after the first-quarter bank earnings season is over, and are trying to be sensitive to financial market reaction....
Originally posted by jam321
Transparency at its finest.
* Zombies: Institutions kept alive only by TARP funding. These subtract value from the economy and should be put out of their misery through controlled liquidation, with the healthy parts being salvaged.
* Walking Wounded: These banks may need a little bit more help, but are currently operating adequately on their own. One caveat: An intensification of economic downturn could push some of them into "zombie" status - or even bankruptcy.
* Risky but Proud: These banks have relatively high risks, because of acquisitions or their business models, but are operating at full blast and can hold their heads high for their success in dealing with 2008’s enormous difficulties.
* Hidden gems: These banks have conquered 2008’s difficulties, taken care of their bad debt problems, and still managed to make a substantial profit. Short of a repeat of what U.S. banks had to deal with from 1929-1933 as part of the Great Depression, these financial institutions should continue to operate in the black.
Hidden gems: These banks have conquered 2008’s difficulties, taken care of their bad debt problems, and still managed to make a substantial profit. Short of a repeat of what U.S. banks had to deal with from 1929-1933 as part of the Great Depression, these financial institutions should continue to operate in the black.
U.S. officials will not look to close any banks based on the results of "stress tests" being conducted to determine how the largest U.S. banks would fare under more adverse economic conditions, a source familiar with official talks said on Thursday.
"You can't close a bank based on a hypothetical," the source said, speaking anonymously because the tests, being done by the U.S. Treasury, are still being finalized. "And you wouldn't want to anyhow, based on the size of the banks."
However, the tests are likely to show that some banks may have sizable capital needs under the conditions being tested, which is "common sense," the source said.
The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.
The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.
“If you allow banks to talk about it, people are just going to assume that the ones that don’t comment about it failed,”
Soros, speaking to Reuters Financial Television, also warned that rescuing U.S. banks could turn them into "zombies" that draw the lifeblood of the economy, prolonging the economic slowdown.
"I don't expect the U.S. economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown," Soros said, adding that in 2010 there might be "something" in terms of U.S. growth.