Citi May Need Extra $10B to Pass Stress Test

But Fed chief is encouraged by bank response

(NEWSER) - Big banks' response to "stress tests" has been encouraging but they will need to watch out for risks not covered by the tests, Ben Bernanke warned regulators yesterday. The Fed chief—signaling that investment giants like Goldman Sachs can expect tighter scrutiny—said banks should self-test for potentially disastrous "operational, liquidity and reputational risks," Bloomberg reports. Bernanke warned that the financial situation remained fragile, and that the government was prepared to inject more capital to shore up the system. More»

(NEWSER) - At the behest of the Federal Reserve, the 19 biggest US banks are projecting their losses on 12 categories of financial product such as loans and mortgage securities, the New York Times reports. The Fed, which asked the institutions to project a hypothetical scenario of a “stressed economic environment,” made outlines of its criteria public today. More»

Bank takes big stride towards meeting 'stress test' condition

(NEWSER) - Bank of America has sold shares to fill $13.5 billion of the $34 billion capital hole the Fed's "stress test" uncovered in the bank's balance sheet, Marketwatch reports. The bank—taking advantage of a 40% jump in its share price over the last month—issued 1.25 billion shares at an average price of $10.77 as part of its "at-the-market" program, which sold shares at or near prevailing prices. More»

(NEWSER) - In the wake of reports that complaining banks cajoled the Federal Reserve into sweetening some stress test results, the Wall Street Journal looks at the hard numbers. Citigroup, for example, was originally supposed to raise $35 billion; the number eventually released was $5.5 billion. The total for Bank of America, meanwhile, shrank from more than $50 billion to $33.9 billion. More»

Fed massaged some figures to portray banks as healthy

(NEWSER) - Some major banks managed to cajole the government into using more optimistic figures in its "stress test" results, insiders tell the Washington Post. Banks like Citigroup—eager to show they were healthy and didn't need more help from the government—were given credit for pending moves to raise capital, resulting in the report showing shortages of capital well below what many experts had predicted. More»