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THE WALL STREET JOURNAL US Officials To Release Bank Stress-Test Results Thursday

By DAMIAN PALETTA

Of THE WALL STREET JOURNAL

http://www.djnewsplus.com/article/0,,SB124119036730453959,00.html?mod=article-outset-box

WASHINGTON -- The Federal Reserve and the Treasury Department plan to release results of their tests assessing the health of the country's 19 largest banks on Thursday, later than had been previously planned.

Regulators are expected to disclose potential loss estimates for each individual bank, a government official said. In addition, the results will be tallied across the banks to give the public a better picture of the health of the banking industry. U.S. officials will disclose the loss estimates for certain loan categories and the banks' ability "to absorb those losses" under more-adverse economic scenarios.

Release of the results was pushed back several days as federal regulators and the banks have continued to debate the results. Several banks, including Bank of America Corp. (BAC) and Citigroup Inc. (C), have challenged the government's findings.

(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)

The results are expected to show that several banks may need more capital, or a higher quality of capital, in order to continue lending if the economy worsens through 2010. Government officials have said that any requirement that a bank improve its capital standing doesn't mean the government thinks the bank is going to fail. In fact, the government has said it wouldn't allow any of the 19 banks undergoing the test to fail.

In order to improve their capital standing, banks will have the option of raising capital from private investors, borrowing more capital from the government, or converting existing government investments into common stock.

Exactly how the stress tests would be unveiled has been unclear since February, when the Obama administration announced plans to conduct a thorough exam of the banking industry's ability to continue lending under tough economic conditions. A smooth release is a critical component of the effort, which is designed to restore confidence in banks.

Government officials originally hoped to release the results on May 4, but that plan was delayed as the discussions with banks intensified. The plan now is to release the results late in the afternoon on May 7.

---By Damian Paletta, The Wall Street Journal; [e-mail]

http://www.djnewsplus.com/article/0,,SB124119036730453959,00.html?mod=article-outset-box
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