US Government nervous about Banks stress test results - by Pallavi Gogoi
Next week's bank stress tests results are a key part of the Obama administration's economic recovery plan, but the government has big worries about how to deliver the results without hurting the banks' reputation or scaring financial markets. However, the U.S. government has never released such specific data about any bank examination for fear that there could be a run on banks with less capital, with depositors pulling their money out and businesses moving to other banks. Fed Chairman Ben Bernanke has said the banks will be given six months to raise private capital before they can tap the government bailout fund. However, Wallace says private investors will only provide capital if they know there is a government backstop such as a guarantee it will cover any future losses above a certain level.
Note EU-Digest:Given the above uncertainties it can only be hoped that the figures of the stress test won't be "tweaked" to reflect only the positive?
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