Wednesday, May 6, 2009

Banks to Submit Plans in One Month

Regulators Ask Banks Needing Capital to Submit Plans (Bloomberg)

According to Bloomberg,

"The government will release results of the so-called stress tests Thursday at 5 p.m. Washington time...

"Banks that need to raise capital under the government’s stress tests will have until June 8 to develop a plan and until Nov. 9 to implement it, U.S. bank regulators said today."

One month? We are talking tens of billion dollars for those banks here. One month?

(Now this is starting to sound familiar. Just like Chrysler's Chapter 11 court hearing. Deadline for counter bids for Chrysler's assets by May 20, lead bid by May 26, final hearing by May 30.... )

A hasty move is often a wrong, very wrong move. And what's the need for haste here? Or is the government hoping that by the time November rolles around, 1) People will forget about the so-called stress test and need for so-called capital; or 2) the economy will recover so much that the banks will not need to do anything after all; or both?

And my question from the previous post remains:

What happens if those banks disagree with the results, and refuse to raise capital?


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