Bank Stress Tests

by Dual Income No Kids on October 27, 2009 · 0 comments

The Wall Street Journal has an excellent article online about the health the 19 largest financial institutions. The article, entitled “Banks Need At Least $65 Billion in Capital” can be found here, and it features a cool interactive graph. The most interesting fact I learned from that article is that Bank of America has a capital gap of about $34 Billion, over twice as much as the institution with the second highest need, Wells Fargo with a $15 Billion gap. Bank of America also took the 2nd most in TARP money with $45 Billion, only $5 Billion less than the leader, Citigroup, whose capital gap is only $6 Billion (who thought we’d be using “only” and “$6 Billion” in the same sentence?).

While the graph is mostly depressing, one bright spot out of the bailed-out banks is Goldman Sachs, who took $10 Billion in TARP funds but has paid it back (plus interest) and do not have a capital gap. It remains to be seen whether others will follow suite, but it is an encouraging sign. I hope the WSJ comes out with the same graph 6 months or a year from now, so we can see our progress.

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