19 Stressed Banks Must Raise $75 Billion
Nothing like peeling a Band-Aid off slowly… The Treasury concluded its painstaking six-week stress tests late yesterday and announced (gasp) the 19 American banks under stress need to raise $75 billion if they plan to stay in business.
Ten of the 19 banks under TARP “protection” will be REQUIRED by the U.S. government to raise capital. They include: Bank of America, Citi, PNC, Fifth Third, GMAC, Wells Fargo and others. Notably absent are JP Morgan and Goldman Sachs.
The best part: Under the government’s “worst case” stress test, the 19 banks stand to lose another $600 billion… an amount large enough to require at least a few bankruptcies and or nationalizations.
What’s the “worst case” according to Timothy Geithner? 10.3% unemployment, a GDP contraction of 3.3% for the year and another 22% fall in housing prices.
Heh, that’s it? That’s not far off our best-case scenario. In fact, with a modicum of imagination, it’s not hard to envision much worse.
The Bureau of (be)Labor(ed) Statistics says 539,000 Americans lost their jobs in April. That’s a horrendous number, but still below the 600,000 forecast earlier in the week. And it’s actually the best jobs number since October.
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The official unemployment rate still fell in line with Wall Street estimates. At 8.9%, it’s a 25-year high and just a hair below the 1975 peak of 9%.
Since the beginning of 2008, 5.7 million Americans have lost their jobs. A record 6.3 million people are currently filing for unemployment benefits.
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