Stress Test Results Less Onerous Than Feared

Here is a summary of the stress test results from the WSJ.com:

WASHINGTON -- Ten of the 19 largest U.S. financial institutions will be required to raise a combined $75 billion in capital, as the U.S. government for the first time divided healthy banks from those which may need help to weather a worsening economy.

U.S. Treasury Secretary Timothy Geithner, in a press conference, said he was "reasonably confident" the banks could raise the needed capital. Federal Reserve Chairman Ben Bernanke said the results should provide "considerable comfort" about the health of the banking system.

Bank of America Corp., Citigroup Inc., Wells Fargo & Co., GMAC LLC and Morgan Stanley were told they need to raise capital due to the results of the government's stress tests.

Regions Financial Corp., Fifth Third Bancorp, KeyCorp, PNC Financial Services Group Inc. and SunTrust Banks also were told to bolster their reserves.

By contrast, J.P. Morgan Chase & Co., Goldman Sachs Group Inc., American Express Co., BB&T Corp. , State Street Corp., MetLife Inc., Bank of New York Mellon Corp., US Bancorp and Capital One Financial Corp. don't need to raise additional capital.

Bank of America must raise nearly $34 billion in capital, more than any of its peers. All 10 banks will need to raise Tier 1 common capital to bolster their reserves.

The Treasury painted a grim picture of the toll of the financial crisis on the banking system. It said total losses at the 19 banks due to the crisis that began in mid-2007 could reach $950 billion.

Meanwhile, losses in 2009 and 2010 at the 19 banks could total $600 billion under the government's scenario of a deepening economic downturn. Mortgage loans and consumers loans could account for 70% of the potential losses.

The directives come after the government's weeks-long exercise testing how the 19 banks would fare under darker economic scenarios. Mr. Bernanke said the tests weren't "tests of solvency."