This should be good news.
Banks will have a choice of raising private capital or accepting taxpayer funds from the Treasury. Any new government money will come in the form of convertible preferred securities, which would acquire voting rights if converted into common stock.
The Treasury said it would release guidelines on how it will handle those voting rights before completing any transactions. The shares would convert either at a bank’s request or at the end of a seven-year period.
Full context here:
U.S. Sets a 6-Month Deadline for New Bank Capital (Update2)
Email | Print | A A A
By Rebecca Christie and Robert Schmidt
Feb. 25 (Bloomberg) -- Regulators set a six-month deadline for the biggest 19 U.S. banks to raise any new capital deemed necessary after a review of their balance sheets.
The regulators will complete their so-called stress tests by the end of next month, the Treasury said in a statement in Washington. Supervisors will determine what the appropriate capital buffer will be for each of the 19 firms after analyzing potential losses under two economic scenarios.
“While the vast majority of U.S. banking organizations have capital in excess of the amounts required to be considered well capitalized, the uncertain economic environment has eroded confidence in the amount and quality of capital held by some,” the Treasury said, announcing guidelines for new bank reviews.
Banks will have a choice of raising private capital or accepting taxpayer funds from the Treasury. Any new government money will come in the form of convertible preferred securities, which would acquire voting rights if converted into common stock.
The Treasury said it would release guidelines on how it will handle those voting rights before completing any transactions. The shares would convert either at a bank’s request or at the end of a seven-year period.
Capital Assessments
In their assessments, regulators will incorporate off- balance sheet commitments, earnings projections, risks of the banks’ business activities and the composition and quality of their capital, the Treasury said.
Losses will be projected under two economic scenarios. Under the “baseline” scenario, the U.S. economy will shrink 2 percent this year and expand 2.1 percent in 2010. The “alternative more adverse” set of projections has gross domestic product dropping by 3.3 percent this year, with a 0.5 percent expansion in 2010.
Any capital investments made by the Treasury will be placed in a separate trust to manage the government’s investments in financial companies.
“U.S. government ownership is not an objective” of the program, the Treasury said. In cases of significant federal investment, “our goal will be to keep the period of government ownership as temporary as possible.”
Federal Reserve Chairman Ben S. Bernanke said today that while the U.S. government may take “substantial” stakes in Citigroup Inc. and other banks, it doesn’t plan a full-scale nationalization that wipes out stockholders.
Nationalization is when the government “seizes” a company, “zeroes out the shareholders and begins to manage and run the bank, and we don’t plan anything like that,” Bernanke told lawmakers in Washington.
Banks with less than $100 billion of assets will also be eligible to participate in the Treasury’s new capital-raising plan.
Today’s statement didn’t specify any potential limit on the amount of money involved. The government has already allocated more than half of the $700 billion financial-rescue program. President Barack Obama late yesterday signaled that the administration will seek more money from Congress for the effort to break the back of the credit crisis.
Banks will have a choice of raising private capital or accepting taxpayer funds from the Treasury. Any new government money will come in the form of convertible preferred securities, which would acquire voting rights if converted into common stock.
The Treasury said it would release guidelines on how it will handle those voting rights before completing any transactions. The shares would convert either at a bank’s request or at the end of a seven-year period.
Full context here:
U.S. Sets a 6-Month Deadline for New Bank Capital (Update2)
Email | Print | A A A
By Rebecca Christie and Robert Schmidt
Feb. 25 (Bloomberg) -- Regulators set a six-month deadline for the biggest 19 U.S. banks to raise any new capital deemed necessary after a review of their balance sheets.
The regulators will complete their so-called stress tests by the end of next month, the Treasury said in a statement in Washington. Supervisors will determine what the appropriate capital buffer will be for each of the 19 firms after analyzing potential losses under two economic scenarios.
“While the vast majority of U.S. banking organizations have capital in excess of the amounts required to be considered well capitalized, the uncertain economic environment has eroded confidence in the amount and quality of capital held by some,” the Treasury said, announcing guidelines for new bank reviews.
Banks will have a choice of raising private capital or accepting taxpayer funds from the Treasury. Any new government money will come in the form of convertible preferred securities, which would acquire voting rights if converted into common stock.
The Treasury said it would release guidelines on how it will handle those voting rights before completing any transactions. The shares would convert either at a bank’s request or at the end of a seven-year period.
Capital Assessments
In their assessments, regulators will incorporate off- balance sheet commitments, earnings projections, risks of the banks’ business activities and the composition and quality of their capital, the Treasury said.
Losses will be projected under two economic scenarios. Under the “baseline” scenario, the U.S. economy will shrink 2 percent this year and expand 2.1 percent in 2010. The “alternative more adverse” set of projections has gross domestic product dropping by 3.3 percent this year, with a 0.5 percent expansion in 2010.
Any capital investments made by the Treasury will be placed in a separate trust to manage the government’s investments in financial companies.
“U.S. government ownership is not an objective” of the program, the Treasury said. In cases of significant federal investment, “our goal will be to keep the period of government ownership as temporary as possible.”
Federal Reserve Chairman Ben S. Bernanke said today that while the U.S. government may take “substantial” stakes in Citigroup Inc. and other banks, it doesn’t plan a full-scale nationalization that wipes out stockholders.
Nationalization is when the government “seizes” a company, “zeroes out the shareholders and begins to manage and run the bank, and we don’t plan anything like that,” Bernanke told lawmakers in Washington.
Banks with less than $100 billion of assets will also be eligible to participate in the Treasury’s new capital-raising plan.
Today’s statement didn’t specify any potential limit on the amount of money involved. The government has already allocated more than half of the $700 billion financial-rescue program. President Barack Obama late yesterday signaled that the administration will seek more money from Congress for the effort to break the back of the credit crisis.
选择“Disable on www.wenxuecity.com”
选择“don't run on pages on this domain”
