Stress-Test Results: Fed Separates Strong Banks From Weak Banks

According to a WSJ report, the Fed has directed at least seven of the nation’s largest banks to increase their capital levels by $65 billion. In the meantime the Central Bank has effectively blessed the stability of six others, making for the first time a clear separation between some of the nation’s stronger and weaker banks.

From The WSJ: As a result of the government’s two-and-a-half-month examination of the U.S.’s 19 largest financial institutions, at least half a dozen — J.P. Morgan Chase & Co., Goldman Sachs Group Inc., MetLife Inc., American Express Co., Bank of New York Mellon Corp. and Capital One Financial Corp. — won’t be told to raise additional capital, according to people familiar with the matter.

By contrast, regulators have told Bank of America Corp. it must take steps to address a roughly $34 billion capital shortfall, the biggest gap among its peers. Wells Fargo & Co. needs to find $13 billion to $15 billion; GMAC LLC, $11.5 billion; Citigroup Inc., $5 billion; and Morgan Stanley, $1.5 billion. Also in need of more capital: Regions Financial Corp. and State Street Corp. of Boston. Results for the remaining six banks couldn’t be learned, but analysts and investors expect several of them to face sizable capital holes.

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