Nation’s Largest Banks Set to Pass the ‘Stress Test’, but More Capital is Needed

The big stress test at 19 of the nation’s largest banks, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say.

That is the good news. The bad news is that many of the largest lenders, despite all those bailouts, probably need to be bailed out again, either by private investors or, more likely, the federal government.

Regulators say all 19 banks undergoing the exams will pass them.

But the tests, which are expected to be completed by the end of this month, are being conducted out of public view. Federal law prohibits the unauthorized disclosure of the results of any bank examination, including the stress tests.

Many analysts predict the reports will show banks are on the mend…..[S]ome analysts however, say investors’ hopes are misplaced.

“Nothing has changed with the fundamentals,” said Meredith A. Whitney… who has been bearish on most financial institutions. [via NYT]

Based on this report – banks, according to officials, are in  ‘better shape than was previously believed.’ However those same officials also say “banks still need more capital.”  Don’t know about you, but I’m confused.

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