Friday, December 18, 2009, 4:09AM ET - U.S. Markets open in 5 hours and 21 minutes.
- Home
- Tech Industries
- Topics
- Reporters
- Subscribe
600 Banks Fail Stress Test
Posted May 19, 2009 08:20am EDT by Joe Weisenthal in Investing, Recession, BankingFrom The Business Insider, May 19, 2009:
The Wall Street Journal has run its own version of the the Fed's stress test on 900 small and midsize institutions, and it claims they'll see losses of about $200 billion by the end of next year.
In such a scenario, at least 600 of the banks would see their capital levels shrink to a level that would be deemed unsafe by regulators.
The biggest culprate? You guessed it, commercial real estate, which could contribute about $100 billion in losses. Continued home loan losses is next, at about $49 billion.
WSJ: "They are in just much worse shape" than the big banks, says Terry McEvoy, an Oppenheimer & Co. analyst who reviewed the Journal's analysis. "There is a lot less earnings power at these banks."
The Fed this month estimated that the 19 stress-tested banks could face losses of $599 billion if the agency's gloomiest economic scenario comes true. For the 10 large companies found to need additional capital, most of the shortfalls are manageable.
Few smaller banks are likely to attract the bargain-hunting investors now expressing interest in recapitalizing the industry's giants. Many smaller banks are trying to bolster their capital by selling assets and making fewer loans.
What's somewhat amusing here is that throughout this crisis, there's been a lot of trumpeting of small banks, as somehow being either a) less stupid or b) less greedy than their Wall Street counterparts, as an explanation for why there hasn't been as much of a crisis on the smaller levels.
Well, a better answer may simply be that their portfolios are different, and haven't been hit in the same way yet. And to the extent that small bankers are greedy and stupid, too? Well then this just means that those terms cease to have any useful meaning.
For more coverage, see The Business Insider:
59 Comments
Al - Tuesday May 19, 2009 08:56AM EDT
I AM BETTING ON MARKET EXPECTATIONS BECAUSE I EXPECT TO SEE BETTER THAN EXPECTED EXPECTATIONS THAN WAS EVER EXPECTED BEFORE!!!! LOLLLLLLLLLLLLLLL.......
Al - Tuesday May 19, 2009 08:59AM EDT
I AM BETTING ON MARKET EXPECTATIONS BECAUSE I EXPECT TO SEE BETTER THAN EXPECTED EXPECTATIONS THAN WAS EVER EXPECTED BEFORE!!!! LOLLLLLLLLLLLLLLL.......
David - Tuesday May 19, 2009 09:31AM EDT
The big banks are fine because they have all the taxpayer money! The big culprit that goes unacknowledged is the derivatives market that pumped up all assets in the first place. Derivative must be all but eliminated through regulation and fees to keep this fraud out of the market. The banks must be seperated from the holding companies by bringing back 'Glass-Steagall'. Then the FDIC can do its job of regulating and ensuring safe and secure banks.
Yahoo! Finance User - Tuesday May 19, 2009 09:42AM EDT
America is all about hard work and productivity! I try to make “bets” that reflect my hard-working, productive spirit, then I sit on my ass and wait to see how they turn out.
Yahoo! Finance User - Tuesday May 19, 2009 09:49AM EDT
Changing the FDIC rules hit small banks hard. They now need to insure 250,000 rather than 100,000 per wealthy depositor.. that's a big chunk of change that comes right off their income.. meanwhile they are not getting any bailout money to compensate for this.. what did you think would happen?
Yahoo! Finance User - Tuesday May 19, 2009 10:09AM EDT
It seems like we are close to having the Bank Of The World..... to control our monies.... if ....we have any money to control!... The Bilkenburgh Group is hastily putting their control upon us.....The market is going to crash like we have never seen it before, and we will be extremely lucky if we ever have another presidential election....There are 80 million gun owners in this country... it will not be an easy chore to sit back and let this happen.
mmark - Tuesday May 19, 2009 10:22AM EDT
next year will be a good year to buy commercial real estate. it will be like the housing market now. i think i'll go out and buy a strip mall for next to nothing, and have as tenants only green businesses. the people will flock to my stores and i'll be rich!
Yahoo! Finance User - Tuesday May 19, 2009 10:24AM EDT
with most of those 80million gun owners residing down there in dixie
onejoeusa - Tuesday May 19, 2009 10:26AM EDT
What ever happened to the Story That went Like This---United States Government gives 25 billion to WELLS FARGO BANK. WELLS FARGO BANK says We don't want or need YOUR MONEY...OBAMA Administration says TAKE IT and KEEP or WE will CANCEL your FDIC Insurance. WHY HAS THE MEDIA NOT BEEN COVERING THIS...WHY ??????
Kate - Tuesday May 19, 2009 10:27AM EDT
The profit motive is essential for a prosperous economy. However, most people are quite stupid and will do what every body else is doing --with a follow-the-herd mentality. That's why we need government (by the people, for the people) regulation to keep it from getting out of control. It's possible to have excess in both capitalism and socialism. The smart country will find the middle ground. I believe that smart country is the USA and we will find the right balance.
__A_YAHOO_USER__ - Tuesday May 19, 2009 10:59AM EDT
why don't we the people give Congress a stress test and kick their @ss out of office....nuttin' but turnips and dipsticks and the only damn thig they know how to do is spend my dang money....tat ain't what those few fat farmers with the penmanship of poets had in mind back in 1776 when they wrote down the American dream. $57 trillion in debt and not one of you @ssholes no how to pay the printer.
Kurt - Tuesday May 19, 2009 11:01AM EDT
And if Interest rates should head higher well the earnings on all these low ball refinanced mortagages and loan modifications are going to look like toxic loans on the balance sheets of these banks as their earnings erode. Who are we kidding.
Suzanne - Tuesday May 19, 2009 11:03AM EDT
anybody heard of ENRON? 89% of the people who got hosed in Texas were gun-toters....how many corporate cheeses caught a bullet in the noggin? (HINT--RHYMES WITH NERO)....how many shot themselves? (HINT--MORE THAN 10)....if it wasn't so sad.....it would be funny. ........HI-HO-HI-HO, IT'S BACK TO WORK WE GO.....
Wes - Tuesday May 19, 2009 11:03AM EDT
in the frenzy to get some negative news out, tech ticker didn't even bother to proofread. my guess is the culprate is aaron task.
Wes - Tuesday May 19, 2009 11:06AM EDT
Changing the FDIC rules hit small banks hard. They now need to insure 250,000 rather than 100,000 per wealthy depositor.. that's a big chunk of change that comes right off their income.. meanwhile they are not getting any bailout money to compensate for this.. what did you think would happen? Do you have any idea how the FDIC works? It's not a law that requires banks to do something. The FDIC is a federal guarantee on the deposits in banks - it comes from the government, not the banks themselves. If the banks were forced to self-insure deposits, there'd be no purpose to having the FDIC. But you're probably a genius day trader shorting stocks all day from your mom's basement, so I guess I don't need to tell you that.
Yahoo! Finance User - Tuesday May 19, 2009 11:08AM EDT
The fact that the banks had to force the Fed and Giet*ner to change the questions to ones they could answer profitably says it all......LOL....as former fed Chairman said..."It's a Joke!"
Paul - Tuesday May 19, 2009 11:15AM EDT
GIVE BANKS AS MUCH GREEN AS THEY WANT!! AND TAX US !!!
Want to post a comment? Sign in now to begin.
Recent Posts
Most Recommended
Copyright/IP Policy - Terms of Service - Privacy Policy - Help
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.
Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.
Howard - Tuesday May 19, 2009 08:43AM EDT
It seems like we are close to having the Bank Of The World..... to control our monies.... if ....we have any money to control!... The Bilkenburgh Group is hastily putting their control upon us.....The market is going to crash like we have never seen it before, and we will be extremely lucky if we ever have another presidential election....There are 80 million gun owners in this country... it will not be an easy chore to sit back and let this happen.