Capital Assistance Program Stress Tests Start February 25
Financial institutions with assets in excess of $100 billion seeking government assistance will undergo "stress tests" starting February 25, according to a joint statement released today by the Treasury Department, the FDIC, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Reserve. "Stress tests" are defined as "a forward looking assessment of what banks need to keep lending even through a severe economic downturn" by the Financial Stability Plan's Capital Assistance Program previously announced February 10, 2009. The Capital Assistance Program creates a "capital buffer" by giving financial institutions a preferred security investment from the Treasury Department in convertible securities which can be converted into common equity if needed due to a "worse-than-expected economic environment." Click here for today's joint statement.
