April 21 (Bloomberg) -- Treasury Secretary Timothy Geithner said banks found to need additional capital at the conclusion of regulators’ stress tests will have a range of options for shoring up their balance sheets.
The Treasury chief, testifying before a congressional oversight panel today, said lenders will be able to take taxpayer money, raise funds from private investors or convert previous government investments from preferred to common shares. Each bank can chose the “best mix” of alternatives and will likely make different choices, Geithner said.
“They’ll be balancing lots of different considerations,” he said. “That’s a process they’re going to have to undertake, and it’s going to require a fair amount of care and effort.”
Geithner, in sometimes combative testimony, underscored that financial regulators are taking the lead in reviewing the 19 biggest banks. Those agencies -- and not the Treasury -- will also determine when the healthiest banks can pay the government back, he said.
The Federal Reserve is leading the assessments, with results due for release on May 4. The tests are designed to ensure that firms have enough capital to weather a deeper economic downturn over the coming two years.
In a prepared statement for the hearing in Washington, Geithner said “the vast majority of banks have more capital than they need to be considered well capitalized by their regulators.” more...
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