Fed Approves Capital Raise Plans For All 10 Banks That Failed Stress Tests

 

The Federal Reserve says:

The 10 banking organisations required by the Supervisory Capital Assessment Program to bolster their capital buffers have all submitted capital plans that, if implemented, would provide sufficient capital to meet the required buffer under the assessment’s more-adverse scenario. As supervisors, we will be working with the institutions to ensure their plans are implemented quickly and effectively.

Supervisors also continue to work with all regulated financial institutions to review the quality of their corporate-governance, risk-management and capital-planning processes.

Although the Fed doesn’t give the names or figures, that means that the banks have put in plans to raise at around $74 billion of new capital. Here’s the list of who was told to raise what.

  • Bank of America, $33.9 billion
  • Wells Fargo, $13.7 billion
  • GMAC, $11.5 billion
  • Citigroup, $5.5 billion
  • Regions Financial, $2.5 billion
  • SunTrust Banks, $2.2 billion
  • KeyCorp, $1.8 billion
  • Morgan Stanley, $1.8 billion
  • Fifth Third Bancorp, $1.1 billion
  • PNC Financial Services, $600 million

Importantly, this is not about paying back the TARP. At least not yet. Some of these banks have already begun raising capital, and some have actually met the requirements. Bank of America, Morgan Stanley and PNC Financial Services have already met or exceeded requirements.

The banks that will likely be given permission to pay back the TARP, perhaps as soon as tomorrow, are the nine firms that were not instructed to raise capital after the stress test. Those firms are Goldman Sachs, Bank of New York Mellon, J.P. Morgan Chase, BB&T, State Street, U.S. Bancorp, insurer MetLife, and credit card companies American Express and Capital One Financial.

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