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Wells Fargo, 9 Others Expected to Fail Stress Test

By Neal Colgrass,  Newser Staff

Posted May 4, 2009 8:51 PM CDT
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(Newser) – The Obama administration is expected to tell 10 of 19 banks receiving "stress tests" to raise more capital as a buffer against possible dark days ahead, the Wall Street Journal reports. Down from a recent estimate that 14 banks needed more money, the list may include Wells Fargo, Bank of America, and Citigroup. Officials plan to start breaking the news to banks tomorrow and release official results Thursday.

Officials say banks can hit up private investors for capital instead of tapping the Troubled Asset Relief Program, which still holds $109.6 billion. Banks that can't raise money could turn government preferred shares into common equity, giving Washington greater bank ownership. Despite reports of the stress test results, optimism carried Wells Fargo, BofA, and CitiGroup stocks higher today.

In this April 21, 2009 file photo, a branch of Bank of America is shown in New York's Times Square.
In this April 21, 2009 file photo, a branch of Bank of America is shown in New York's Times Square.   (AP Photo/Mark Lennihan, file)
Citigroup Center is shown Thursday, April 16, 2009 in New York. Citigroup's problems are far from over, but it had its best quarter since late 2007.
Citigroup Center is shown Thursday, April 16, 2009 in New York. Citigroup's problems are far from over, but it had its best quarter since late 2007.   (AP Photo/Mark Lennihan)
US Treasury Secretary Timothy Geithner joins delegates in Washington, Sunday, April 26, 2009.
US Treasury Secretary Timothy Geithner joins delegates in Washington, Sunday, April 26, 2009.   (AP Photo/J. Scott Applewhite)
A Wells Fargo sign hangs above the entrance of a Wells Fargo home mortgage office on April 9, 2009 in Chicago, Ill.
A Wells Fargo sign hangs above the entrance of a Wells Fargo home mortgage office on April 9, 2009 in Chicago, Ill.   (Getty Images)
In this April 14, 2008 file photo, a Wells Fargo Bank sign is seen in front of a branch in Sunnyvale, Calif.
In this April 14, 2008 file photo, a Wells Fargo Bank sign is seen in front of a branch in Sunnyvale, Calif.   (AP Photo/Paul Sakuma, file)
A Citibank is shown in Mountain View, Calif., Friday, Oct. 3, 2008.
A Citibank is shown in Mountain View, Calif., Friday, Oct. 3, 2008.   (AP Photo/Paul Sakuma)
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Citigroup • Bank of America • Wells Fargo • capital injection • TARP • stress tests

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