US regulators have unveiled results of the government's stress tests. They are urging 10 of the nation's largest banks to raise about 75 billion US dollars in new capital to withstand future losses if the recession worsens.
Regulators say Bank of America needs to raise 33.9 billion US dollars in capital, Wells Forgo needs to raise 13.7 billion US dollars, and the auto and mortgage lender GMAC needs 11.5 billion US dollars more in capital. Meanwhile, Citigroup needs to raise 5.5 billion US dollars in capital. The US Federal Reserve is leading the bank reviews. The Fed says the results should provide considerable comfort to investors and the public. It notes that nearly all banks have sufficient capital to absorb potential higher losses in case of a worsening global economy. The U.S. administration says the stress tests will help restore confidence, and encourage lending by the banks.
Timothy Geithner, US Treasury Secretary, said, "These actions today are going to bring an unprecedented level of transparency and clarity to the health of the nation's banking system. They're going to replace this deep cloud of uncertainty over the system, again, with more disclosure and with more certainty. That's going to make it easier for private capital to come into the financial system, help expand the capacity of banks to lend, help banks replace the government's investments with private capital as soon as possible."
(CCTV May 8, 2009)
