Wednesday, April 8, 2009

Fed Bank Stress Test

Bank stress test has been completed. The results are withheld until earning season is over. The aggregated result may be released. This indicates that at an aggregate level, the stress test results reveal weakness vs. strength.

What if weakness is revealed?

It could force capital infusion. Where will the capital infusion come from? It could come through Public-Private-Investment-Program (PPIP) since the others have been exhausted.

What if strength is revealed?

Then, the banks can focus on serving customers instead of worrying about raising capital.

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