You had a STRESS TEST?
Evidently the Treasuries idea of a sound financial system is contingent upon a positive "Stress Test"
The horrific slide in most of the regional banks has to do with this particular proposal.
All banks with more than $100 billion in assets will be required to submit to the test, unveiled as part of Treasury's Financial Stability Plan to tackle the economic crisis.
That level of assets encompasses such institutions as BAC, JPM, and WFC, all of which have dropped badly this afternoon.
Some other institutions, most notably the regional banks will face a much steeper test.
Banks like SunTrust, Huntington, Comerica, Fifth Third, and Regions Financial all have major issues with regards to equity capital on their balance sheets, if the test was administered today, they would all fail miserably....Like we didn't know this earlier.
If a bank passes the test, they will be given capital to buffer some of their losses.
From the looks of it, most of these banks are DOA.
According to an article on the Wallstreet Journal today, Most of these banks are doing great, and using all of the TARP funds for lending and absolutely nothing else.
ReplyDeleteShoot according to their numbers Citi and JPM alone saved over 3/4 of a million houses from foreclosure.
If this is the case then I guess the way to solve this problem is by giving the entire 800 billion dollar bill that just passed, all to the banks. This way, you know, they will keep lending and keeping people from losing their homes.
I understand the need to come out and say something about the usage of TARP funds but could anything these CEOs say really be true? I mean Jamie Dimon is still hanging onto the idea that JPMs purchases of Bear Sterns and WaMu was only "to help stabilize our financial system."
I have no doubt that banks may have loosened up a little on the lending, compared to 6 months ago, but they make it sound like once they received TARP funds, the flood gates opened.
With such a grim outlook for the entire financial sector, is there any bank that you would consider a "bright spot?"
Nice comments-
ReplyDeleteThe banks are involved in a lot of Re-Fi work currently. But what the major problem is what happens to all of the home owners who have lost their jobs? How is re-fi going to help them? This is a 100 year perfect credit storm. No way out.
There is one bank that actually did well last year.
The bank is UMG Financial in Missouri.
Nice comments-
ReplyDeleteThe banks are involved in a lot of Re-Fi work currently. But what the major problem is what happens to all of the home owners who have lost their jobs? How is re-fi going to help them? This is a 100 year perfect credit storm. No way out.
There is one bank that actually did well last year.
The bank is UMG Financial in Missouri.