Salon: Ten Banks Expected To Fail Stress Tests

[Amerigo Vespucci]

MAY 6, 2009 2:41AM
Ten Banks Expected to "Fail" Stress Tests

1). Citibank is held by Citigroup. It's expected to need a major infusion of cash -- talk is $10 billion. Citi apparently appealed the government's findings. Just this week, it sold its Japanese finance company, Nikko Cordial, for about $3.4 billion (it bought Nikko in 2008 for around $18B) to raise some much-needed cash. Citi is largely considered the bell-weather of this test, in that if it's deemed to "pass," the rest of the test should be considered a joke. Current government investment in Citi: ~$45 billion (some in common stock).

2). Bank of America is the nation's largest retail bank, as of last fall when it bought Merrill Lynch -- and is also expected to be the bank in the most trouble, since last fall it -- hey! -- bought Merrill Lynch. BoA is expected to need a whopping $33.9 billion in additional capital post-test. Current TARP investment in BoA: ~$45 billion (unless you count the government's asset guarantees in. Then we're talking 45 + $142 billion = $187 billion).

3). Wells Fargo was considered in prime shape this fall when it bought out troubled Wachovia, and it took money from the TARP -- but only under duress. Now, despite the CEO's protests that the stress tests are "asinine," the bank is considered one of the most likely to be under pressure to raise new capital. Warren Buffet, whose Berkshire Hathaway investment group owns shares of Wells Fargo (and US Bancorp, SunTrust, and BoA) and pushed for the Wachovia takeover, called Wells and US Bancorp "extremely strong banks" Monday. Current TARP investment: ~$25 billion.

4). KeyCorp owns the Key Bank franchises. It's considered to be widely and heavily exposed in the commerical real-estate market, which is taking some significant hits as businesses suffer during the recession. Analysts at several research/investment firms have said KeyCorp is quite likely to need to raise additional capital, and it has shown a loss in all of the last four quarters. Current TARP investment: ~$2.5 billion

http://open.salon.com/blog/saturn_smith/2009/05/05/ten_banks_expected_to_fail_stress_tests

[Javaman]

1. keep repeating the mantra, "they are too big to fail"

but no one ever says, "they are too big to exist". But you know, that would require the press to do their jobs.

Meh, rinse and repeat. In 3-5 years, none of this will matter anyway.

[AndyA]

2. Bend over, America. They're going to yank our intestines out our back sides

until there's nothing left internally. We're being gutted. And we are being thanked with higher credit card interest rates, higher credit card and bank fees, losing our homes to foreclosure, outsourcing of our jobs, and no representation of our interests from the folks in Washington.

Thanks a lot. Enough is enough! SOMEONE has got to put a stop to this shit! :mad: