Bernanke: Risks Remain Despite Stress Tests

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»

Investors find causes for optimism in capitalization news

(NEWSER) - 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." More»

With no federal deal, agencies limited to ad hoc solutions

(NEWSER) - With yesterday’s failure of the $700 billion bailout, the Fed and Treasury are reconsidering their options, the New York Times reports. Fearful of cutting interest rates, they're back to rescuing struggling institutions on a case by case basis, and printing money—offering $150 billion in emergency loans to banks and $330 billion to foreign central banks yesterday. More»

Efforts to save economy result in windfall

(NEWSER) - The Federal Reserve's efforts to keep the economy afloat last year earned it the highest profits in its 96-year history. The Fed—which funds itself and turns its earnings over to the Treasury—made a total of $45 billion last year, dwarfing the profits of many big banks. Interest on the Fed's $1.8 trillion in government bonds and mortgage-backed securities accounted for much of the earnings. 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»