Ten US banks fail 'stress tests'
08-05-2009
Ten of America's largest 19 banks need a combined US$74.6 billion of extra funds to boost their cash reserves.
That is the main finding of the so-called "stress tests" to see if the banks have sufficient capital to cope should the recession worsen. Bank of America is the most at risk, needing an additional US$33.9 billion.
"Our hope with today's actions is that banks are going to be able to get back to the business of banking," said US Treasury Secretary Timothy Geithner. Other banks that need more money include Wells Fargo, which is said to require US$13.7 billion, and GMAC, the financial arm of General Motors, which needs US$11.5 billion.
Citigroup requires an additional US$5.5 billion of funds, and Morgan Stanley has been told to find US$1.8 billion. Some of the banks have already indicated how they intend to raise the money they need by private means such as asset sales, rather than having to secure any additional government loans.
The 19 banks that were tested by Treasury Department and Federal Reserve officials account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy. Mr Geithner said earlier that no US bank being screened by regulators was at risk of insolvency.
