Bankers and regulators worry about how much of the results to release. Too much or too little information could undermine the financial institutions or the bailout.
By Jim Puzzanghera and E. Scott Reckard April 19, 2009
Reporting from Los Angeles and Washington -- Government tests on the financial health of the nation's major banks are causing significant stress on Wall Street and in Washington, where bankers and officials fear that the release of highly anticipated information may do more harm than good.
The Obama administration is finding itself in a potentially no-win situation as it prepares to release details Friday about the methodology used in the tests, and at least partial results May 4.
The so-called stress tests will determine whether the banks need more government bailout money and the $700-billion rescue fund needs to be replenished.
Regulators and administration officials are still wrestling with how much of the test results to disclose.Releasing too much information could undermine the banks' health -- the very thing that the administration is trying to avoid, experts said. Revealing too little after weeks of buildup would cast doubt on the process and create a vacuum in which investors and depositors would make their own assumptions, possibly leading to runs on the weakest banks."They've gotten themselves in a pickle on this thing," said Bert Ely, an independent banking analyst. "It's clear they didn't think through how this was going to play out."
The goal of the tests is to figure out whether Bank of America Corp., Citigroup Inc. and 17 other banks with more than $100 billion in assets each need more money over the next two years to ride out a possible worsening of the recession. They have received a total of about $214 billion in bailout money.
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