Stress test results

Some banks are weak, others are strong. How's that for insight? Actually, there's a lot more to the government's examination of the nation's major banks. Here's how the NYT sums it up:

Broadly speaking, the test results suggested that the banking industry is in better shape than many had feared. Of the nation's 19 largest banks, which sit atop two-thirds of all deposits, regulators gave nine a clean bill of health. The remaining 10 were ordered to raise a combined $75 billion in equity capital as a buffer against potential losses should the economy deteriorate. That amount is far less than even the most optimistic forecast. But the tests left some crucial questions unanswered. Once the banks satisfy regulators, will they start making more of the loans that businesses and consumers need? And what happens if this recession turns out to be even worse than regulators' worst-case assumptions -- and the banks' losses start ballooning again?

By the way, State Street Corp. was mistakenly named as one of the institutions needing additional capital. It's been given a clean bill of health.



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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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