Sunday, May 10, 2009

In Battle With Fed, Banks Won

By sara.behunek

Details surrounding the bank stress tests continues to make headlines, with the Wall Street Journal and the Financial Times leading with how the U.S. government has, and will continue, to make concessions to the banks. According to the WSJ, the Federal Reserve’s initial estimate of capital deficits was much larger than the $75 billion or so reported Thursday. But the agency, toeing a fine line between trying to restore confidence with the tests while also maintaining its credibility, finally agreed to scale back some of the findings "following two weeks of intense negotiations." A senior executive at one of the banks actually described the early numbers as “mind-numbing,” while another detailed Bank of America’s (BAC) reaction to a more than $50 billion capital hole as “shocked.” Eventually, BofA’s capital deficit was pegged at $33.9 billion, which, according to a bank spokesperson, was reached through an “adjustment for first-quarter results and errors made by regulators in their analysis” and not as a result of lobbying.

In Battle With Fed, Banks Won | U.S. | Reuters

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