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| US banks 'safe from insolvency' | US banks 'safe from insolvency' |
| (30 minutes later) | |
| No US bank being screened by regulators is at risk of insolvency, US Treasury Secretary Timothy Geithner has said. | No US bank being screened by regulators is at risk of insolvency, US Treasury Secretary Timothy Geithner has said. |
| The eagerly awaited results of "stress tests" on the financial health of 19 US banks are to be released after US financial markets close at 2200 BST. | |
| The tests are expected to show that tens of billions of dollars are needed to bolster some banks' finances. | The tests are expected to show that tens of billions of dollars are needed to bolster some banks' finances. |
| Citigroup and Bank of America are widely expected to need to raise the biggest amounts of cash. | Citigroup and Bank of America are widely expected to need to raise the biggest amounts of cash. |
| Reports said that Citigroup may need more than $50bn (£33bn), while Bank of America may need an extra $34bn. | Reports said that Citigroup may need more than $50bn (£33bn), while Bank of America may need an extra $34bn. |
| The stress test results will not be credibly interpreted as a sign of of bank health Professors Nouriel Roubini and Matthew Richardson, New York University Q&A: What are bank stress tests? Have the tests passed the test? | The stress test results will not be credibly interpreted as a sign of of bank health Professors Nouriel Roubini and Matthew Richardson, New York University Q&A: What are bank stress tests? Have the tests passed the test? |
| Wells Fargo and GMAC, the financial arm of General Motors, may also be required to raise extra cash, but the New York Times said that the 19 banks will need less than $100bn in total - less than some had feared. | Wells Fargo and GMAC, the financial arm of General Motors, may also be required to raise extra cash, but the New York Times said that the 19 banks will need less than $100bn in total - less than some had feared. |
| Despite Mr Geithner's comments, US investors appear to be nervous ahead of the release of the results. Wall Street's main Dow Jones index was down 11 points or 0.1% to 8,523 in morning trading. | Despite Mr Geithner's comments, US investors appear to be nervous ahead of the release of the results. Wall Street's main Dow Jones index was down 11 points or 0.1% to 8,523 in morning trading. |
| Careful look | Careful look |
| US banks are being tested to see if they have sufficient cash reserves to cope should the recession worsen. | US banks are being tested to see if they have sufficient cash reserves to cope should the recession worsen. |
| A small number, including Bank of America and Citigroup, will be instructed to raise billions of additional capital BBC business editor Robert Peston Read Robert Peston's blog | A small number, including Bank of America and Citigroup, will be instructed to raise billions of additional capital BBC business editor Robert Peston Read Robert Peston's blog |
| Federal Reserve Chairman Ben Bernanke said the test was a "truly remarkable effort" that was designed to determine "how much capital the banks need to stay well capitalised and to continue lending". | Federal Reserve Chairman Ben Bernanke said the test was a "truly remarkable effort" that was designed to determine "how much capital the banks need to stay well capitalised and to continue lending". |
| "This is not a solvency test - all [the banks] are solvent," he added. | "This is not a solvency test - all [the banks] are solvent," he added. |
| He said the 19 banks being tested account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy. | He said the 19 banks being tested account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy. |
| Mr Bernanke's comments echoed those of Mr Geithner made earlier in a television interview with the US's Charlie Rose Show. | Mr Bernanke's comments echoed those of Mr Geithner made earlier in a television interview with the US's Charlie Rose Show. |
| "We brought the nation's financial supervisors together, and in an unprecedented step, asked them to do a careful look under the hood, to take a careful look at how much - how strong these institutions were in the event things got worse," Mr Geithner said. | "We brought the nation's financial supervisors together, and in an unprecedented step, asked them to do a careful look under the hood, to take a careful look at how much - how strong these institutions were in the event things got worse," Mr Geithner said. |
| The results would bring transparency and improve confidence in the banking system, he added. | The results would bring transparency and improve confidence in the banking system, he added. |
| BANKS UNDER SCRUTINY JPMorgan Chase, Citigroup, Bank of America, Wells Fargo & Co, Goldman Sachs, Morgan Stanley, MetLife, PNC Financial Services Group, US Bancorp, Bank of New York Mellon, GMAC, SunTrust Banks, State Street, Capital One, BB&T Corp., Regions Financial, American Express, Fifth Third Bancorp and KeyCorp | BANKS UNDER SCRUTINY JPMorgan Chase, Citigroup, Bank of America, Wells Fargo & Co, Goldman Sachs, Morgan Stanley, MetLife, PNC Financial Services Group, US Bancorp, Bank of New York Mellon, GMAC, SunTrust Banks, State Street, Capital One, BB&T Corp., Regions Financial, American Express, Fifth Third Bancorp and KeyCorp |
| Mr Geithner said he believed that the majority of the banks would be able to raise money from private sources but if they were unable to do so the government may have to provide them with more taxpayer money. | Mr Geithner said he believed that the majority of the banks would be able to raise money from private sources but if they were unable to do so the government may have to provide them with more taxpayer money. |
| "None of these 19 banks are at risk for insolvency," he said. | "None of these 19 banks are at risk for insolvency," he said. |
| He added that if the government's stakes in any bank were to rise above 30% as a result of extra capital injections, the government would consider taking a more active management role. | He added that if the government's stakes in any bank were to rise above 30% as a result of extra capital injections, the government would consider taking a more active management role. |
| "If we face those situations, we'll have to make judgements about whether the quality of leadership of those board is strong enough so that, again, our interest are met best," Mr Geithner said. | "If we face those situations, we'll have to make judgements about whether the quality of leadership of those board is strong enough so that, again, our interest are met best," Mr Geithner said. |
| Criticism | Criticism |
| Some analysts have been critical of the stress tests. | Some analysts have been critical of the stress tests. |
| Professor Nouriel Roubini and Professor Matthew Richardson of New York University say that the doomsday scenario that the banks' books have been subjected to is actually no worse than the current economic situation. | Professor Nouriel Roubini and Professor Matthew Richardson of New York University say that the doomsday scenario that the banks' books have been subjected to is actually no worse than the current economic situation. |
| And as such "the stress test results will not be credibly interpreted as a sign of of bank health", they wrote in the Financial Times. | And as such "the stress test results will not be credibly interpreted as a sign of of bank health", they wrote in the Financial Times. |
| Others say that the tests do not take account of the banks' varying business models. | Others say that the tests do not take account of the banks' varying business models. |