Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
US banks 'safe from insolvency'
US banks 'safe from insolvency'


Love headlines? Enjoy larfing? Like to see how captions double-speak facts contained in the underlying article? Then read on:

Quote:US banks 'safe from insolvency'

No US bank being screened by regulators is at risk of insolvency, US Treasury Secretary Timothy Geithner has said.

[Image: _45600728_006977364-1.jpg]

The 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.

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, 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
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.

Stock markets worldwide have gained on hopes the stress test results may prove a turning point in the financial crisis.

Careful look

US banks are being tested to see if they have sufficient cash reserves to cope should the recession worsen.

"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 in a television interview with the US's Charlie Rose Show.

The results would bring transparency and improve confidence in the banking system, he said.

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.

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.


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.

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.

What's $100 billion between friends?
The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14

Messages In This Thread
US banks 'safe from insolvency' - by David Guyatt - 07-05-2009, 12:04 PM

Possibly Related Threads…
Thread Author Replies Views Last Post
  Defaulting banks - where will it stop? David Guyatt 671 248,363 22-04-2014, 07:44 AM
Last Post: Peter Lemkin
  Four US banks hold 95.9% of U.S. derivatives: The $600 Trillion Time Bomb That's Set to Explode Ed Jewett 2 3,292 17-10-2011, 05:08 AM
Last Post: Peter Lemkin
  Is Larry Summers taking kickbacks from the banks he’s bailing out? Magda Hassan 0 3,126 29-05-2009, 10:27 AM
Last Post: Magda Hassan
  Background Briefing on Zombie Banks Magda Hassan 0 2,730 17-04-2009, 02:58 AM
Last Post: Magda Hassan
  Joseph Stiglitz: Nationalized Banks Are "Only Answer" Adele Edisen 5 5,056 09-02-2009, 11:46 AM
Last Post: David Guyatt
  UK banks bailed out to tune of £500bn David Guyatt 0 3,473 08-10-2008, 02:47 PM
Last Post: David Guyatt
  Banks in Nigeria Magda Hassan 0 2,544 Less than 1 minute ago
Last Post:
  Government Is Trying to Make Bailouts for the Giant Banks PERMANENT Magda Hassan 0 2,961 Less than 1 minute ago
Last Post:
  Banks whinge at windfall tax on bonuses David Guyatt 0 3,372 Less than 1 minute ago
Last Post:
  Drug money saved banks in global crisis, claims UN advisor Jan Klimkowski 0 3,184 Less than 1 minute ago
Last Post:

Forum Jump:

Users browsing this thread: 1 Guest(s)