Leaked results of the stress tests on America's biggest banks separate sufficiently capitalized banks—including JPMorgan Chase, MetLife, AmEx, and Goldman Sachs—from underfunded ones such as BofA, Wells Fargo, and Citi. Bank shares rose sharply yesterday and today, and some investors said the results were better than they feared. The Wall Street Journal writes that weak banks might have trouble enticing the private investors they'll need, while the New York Times is more optimistic, saying "the big bailouts for the banks may be over."
Stronger banks will be permitted to repay TARP funds and escape restrictions on pay and dividends, while weaker ones will have to address their shortfalls. According to the Times, the weak banks will need less than $100 billion to survive a deep recession. They might raise money through selling shares, spinning off parts of their businesses, or asking the government to convert its preferred shares to common stock. But as the Journal notes, regional banks which lack preferred shares might have no choice but to go back to the Treasury.