Under Pressure, Fed Cooked Some Stress Test Results

By Kevin Spak,  Newser Staff
Posted May 9, 2009 11:39 AM CDT
Treasury Secretary Timothy Geithner, left, and Federal Reserve Chairman Ben Bernanke gather in Geithner's office just before meeting with reporters, May 7, 2009.   (AP Photo/J. Scott Applewhite)
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(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.

Banks argued that the Fed was underestimating their revenue potential and their ability to cut costs. They also convinced the Fed to give them credit for pending transactions. A Bank of America rep said the adjustment was the result of regulator mistakes and “wasn’t lobbying.” Negotiations were particularly tense with Wells Fargo, which publicly called the tests “asinine.” Its number shrank from $17.3 billion to $13.7 billion.