Fed Says Gov't Ready to Save Stress-Tested Banks

[Hissyspit]

Source: Associated Press

Fed says gov't ready to save stress-tested banks

By DANIEL WAGNER (AP Business Writer)
From Associated Press
April 24, 2009 2:57 PM EDT
WASHINGTON - The Federal Reserve on Friday said the government is prepared to rescue any of the banks that underwent "stress tests" and were deemed vulnerable if the recession worsened sharply.

The Fed, in outlining the tests' methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won't be allowed to fail - even if they fared poorly on the stress tests.

Separately, bank executives were being briefed on their test results in meetings across the country. By law, the banks cannot publicize the results without the government's permission, but Wall Street buzzed with anticipation and most financial stocks rose. The Dow Jones industrial average added more than 153 points to about 8,111 in afternoon trading.

The stress tests were designed to gauge how banks would fare during a much worse recession than most economists expect. But the Fed said that a bank needing more capital to cushion against loan losses under its "adverse" economic scenario should not be considered insolvent. Rather, such a bank - if it could not raise additional money from private investors - could get financing from the Treasury's bailout fund.

Read more: http://enews.earthlink.net/article/top?guid=20090424/49f13940_3ca6_15526200904241028912310

[DJ13]

1. The administration misses the point

Most of us (and a bunch of Nobel economics winners) dont WANT the "too big to fail" banks saved in their present form.

They need to be broken up into institutions small enough not to threaten our entire economy ever again.

[Vidar]

3. You've got that right.

[ozymandius]

5. I was going to say....

These banks do not serve in their present form. They do not create wealth. They concentrate wealth - and risk. The risk of calamity is too great to be left to so few ivory towers.

[Pale Blue Dot]

2. Mark my words:

This is a disaster.

[skoalyman]

4. you've got that right

they'll keep going till the bitter end buy a wheel barrel we'll need them to put our tp'ed dollars in :crazy: