Tuesday, April 21, 2009
stress test leaks
The government's "stress tests" of 19 large U.S. banks take a harsher view of loans than of other troubled assets, according to a Federal Reserve document obtained by The Associated Press. That approach favors a few Wall Street banks while potentially threatening major regional players. ...
The regulators' focus could spell trouble for big regional banks undergoing the tests. Their portfolios have more individual loans and fewer of the big pools of securitized loans that Wall Street giants specialize in.
Some analysts said regulators are favoring the largest banks because if even one failed that would pose a severe economic risk. Banks that deal in securities are more interconnected to other corners of the global financial system.
Regulators also face pressure to highlight the weaknesses of some banks, or critics will dismiss the tests as a whitewash. That would undermine the goal of improving confidence in the financial system.
the regionals in the stress test 19: keycorp, fifth third, regions, BB&T, suntrust, bank of new york mellon, US bancorp, PNC.
it wasn't all that long ago that it was postulated that cannibal large banks would be fed the flesh of smaller, healthier banks in an effort to shore up their wrecked balance sheets. given what is transpiring, the regional taken whole wouldn't be of much help -- but laundered through the FDIC, a la the JPM acquisition of wamu, their juicier bits could be of immense assistance for the majors.
as of this writing, the money center banks are up 8-10% on the day -- whereas KEY (-5.8%) and BK (1.6%) are two of the big laggards among the banks.