Saturday, May 9, 2009
The five largest United States banks need a total of US$74.6 billion in extra funds to increase their cash reserves, according to so-called “stress tests” conducted by regulators to determine whether the banks have enough capital to survive the ongoing recession.
“Our hope with today’s actions is that banks are going to be able to get back to the business of banking,” said Timothy Geithner, the US Treasury Secretary.
The results of the stress-test determined that Bank of America was the bank most at risk, needing $33.9 billion. Wells Fargo will require an additional $13.7 billion, while GMAC needs $11.5 billion.
Seven other banks failed the “stress test”, including: Citigroup, Morgan Stanley, Regions Financial, SunTrust Banks, KeyCorp, Fifth Third Bancorp, and PNC Financial Services.
Nine other banks that underwent stress tests, such as Goldman Sachs, JPMorgan Chase, Bank of New York Mellon, MetLife, American Express, State Street, BB&T, US Bancorp and Capital One Financial, were found to have enough capital in case the recession deepens.
Those banks that need extra money will be set a June 8 deadline to draw up their plans to raise the additional capital and have regulators approve them.