Citi, Bank of America Targeted in Stress Tests
The Wall Street Journal reports today that Citigroup and Bank of America may need to raise more capital, based on recent government stress tests of financial
Jul 31, 2020538.2K Shares7.1M Views
The Wall Street Journal reportstoday that Citigroup and Bank of America may need to raise more capital, based on recent government stress tests of financial institutions. The identities of troubled banks were supposed to remain confidential, but The Journal cites the usual “people familiar with the situation.” Regulators contend the need for Citi and Bank of America to raise more capital does not mean that either bank is insolvent, according to the article, but in Bank of America’s case in particular, the capital shortfall may total billions of dollars.
“„Executives at both banks are objecting to the preliminary findings, which emerged from the government’s scrutiny of 19 large financial institutions. The two banks are planning to respond with detailed rebuttals, these people said, with Bank of America’s appeal expected by Tuesday.
“„The findings suggest that government officials are using the stress tests to send a tough message to struggling banks. Bank of America and Citigroup have been the highest-profile problem children in recent months, but it is unlikely that they are the only banks the Federal Reserve has determined might need more capital.
Regional banks that made a lot of commercial real estate loans also are in trouble, The Journal reports.
It looks like the coming battle over the financial system will be about defining the difference between a “stressed” bank and a totally insolvent one — if it even exists.
Paolo Reyna
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Paolo Reyna is a writer and storyteller with a wide range of interests. He graduated from New York University with a Bachelor of Arts in Journalism and Media Studies.
Paolo enjoys writing about celebrity culture, gaming, visual arts, and events. He has a keen eye for trends in popular culture and an enthusiasm for exploring new ideas. Paolo's writing aims to inform and entertain while providing fresh perspectives on the topics that interest him most.
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