US regulators have told top banks to raise $74.6 billion to build a capital cushion after it emerged 10 had failed "stress tests" to see if the banks have sufficient capital to cope should the recession worsen.
Within minutes of release of the bank test results, which showed smaller capital needs than once feared, several of the 10 firms needing capital immediately issued statements detailing how they planned to raise it.
Bank of America, which accounted for almost half of the total capital shortfall with $33.9 billion to be raised, said it planned to sell assets, issue $17 billion in common stock, and take other steps to fill the hole.
"We're going to be watching carefully to make sure they give us credible plans for raising capital and becoming privately owned again," Federal Reserve Chairman Ben Bernanke said at a news briefing, referring to the entire group and not just Bank of America.
The examinations, which involved more than 150 regulatory officials poring over the books of the 19 largest firms, effectively drew a line between healthy and weak, and quantified exactly how much those institutions struggling under the weight of souring loans must raise.
US stock index futures edged higher after the test results calmed fears that the government would have to play an even bigger role on Wall Street. Many of the banks themselves are loath to take more government aid for fear of the scrutiny it may bring and tough conditions on executive compensation.
Several of the banks found to be adequately capitalised said they wanted to repay taxpayer money as soon as possible to get out from under the government yoke.
Reuters