This is the first stress test report I have heard about. Evidently the top of the list of 19 will need additional capital.
Bloomberg reports update on Bank of America and Citigroup bank stress test. The article says that full stress test results may be available as soon as May 4.
Questions include where the additional capital will come from and what will be the market response and economic impact.
It remains possible for additional TARP funds and further movement towards nationalization.
While this is going on, will another regional bank close this Friday?
|
Thank you for visiting. This is the professional blog for |
|
Richard Smith Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC). |
|
Stearns Lending, Inc |
|
Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com |
|
Visit my website: www.RichardSmithHomeLoans.com To inquiry about a home loan Begin Here |
|
Read my most recent articles in Scotsman Guide. |
|
This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc. |
Hi Richard I feel so bad for these banks that I feel like suggesting that maybe we should take up a collection. The catch it is that your donation should not be voluntary and the minimum amount starts at about $10,000 each.
William,
Love the idea. Wish I had thought of it, but do you think $10k is enough. Oh wait we are already giving that money.
I feel much better now. Thank goodness for the bailout.
It's great to live in a capitalistic democracy. :)
Richard
Richard,
Back in the late 80's / early 90's some folks at RBC created what was know as the "Texas Ratio" to determine a banks solvency.
It is calculated by dividing the value of the lender's non-performing assets (Non performing loans + Real Estate Owned) by the sum of its tangible common equity capital and loan loss reserves. Banks tended to fail when this ratio reached 1:1, or 100%.
It would be interesting to see the current top 100 banks ranking using this formula.
Lee,
I had meant to post the link to the Reserve's memo about the SCAP program.
Here is is http://federalreserve.gov/newsevents/press/bcreg/bcreg20090424a1.pdf
The idea is to run "what if" scenarios involving deteriorating employment and housing and the impact of the banks full portfolio of loans.
The SCAP is a projection. Banks that fail the worst case projection will have to do something. Not sure what, yet.
Another question is if running what if scenarios is the correct way to set caapital requirements and the level of government intervention.
These questions are beyond the ability of this English major, but the results and ramifications of the stress test are due out next week.
Richard