UPDATE: GMAC Still Fails Stress Test; Other 9 Cos Are OK - Fed
November 09 2009 - 4:05PM
Dow Jones News
The U.S. Federal Reserve said Monday that auto lender GMAC
Financial Services was the only one of 10 bank-holding companies
that hasn't yet met capital requirements under its stress
tests.
However, the central bank said in a statement that GMAC is
expected to meet the capital ratios required by accessing the U.S.
Treasury Department's Troubled Asset Relief Program, or TARP,
automotive-industry financing program.
Despite extraordinary help from the U.S. government, including
$12.5 billion of federal funds and access to cheap debt, GMAC is
struggling to return to the black as it takes hit after hit on its
mortgage unit, Residential Capital LLC.
GMAC is in talks with the U.S. Treasury to get a third infusion
of up to $5.6 billion in TARP funds.
The Fed said the other nine bank-holding companies that were
found not to meet capital requirements earlier this year had now
raised enough capital or improved the quality of capital
sufficiently.
The central bank said the 10 companies, including GMAC, had
boosted their capital by a total $77 billion, mainly by issuing
common equity or other eligible securities.
In May, Bank of America Corp. (BAC), Citigroup Inc. (C), Wells
Fargo & Co. (WFC), GMAC LLC and Morgan Stanley (MS) were told
they need to raise capital. Regions Financial Corp. (RF), Fifth
Third Bancorp (FITB), KeyCorp (KEY), PNC Financial Services Group
Inc. (PNC) and SunTrust Banks Inc. (STI) also were told to bolster
their reserves.
By contrast, JPMorgan Chase & Co. (JPM), Goldman Sachs Group
Inc. (GS), American Express Co. (AXP), BB&T Corp. (BBT), State
Street Corp. (STT), MetLife Inc. (MET), Bank of New York Mellon
Corp. (BK), U.S. Bancorp (USB) and Capital One Financial Corp.
(COF) were told they didn't need to raise additional capital.
In its stress tests of 19 large banks earlier this year, Fed
economists designed dire economic scenarios and measured the
resilience of big banks against those scenarios. Fed officials
expect to make those stress tests a model for future
supervision.
-By Luca Di Leo, Dow Jones Newswires; 202 862 6682;
luca.dileo@dowjones.com
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