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.
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.