Bailouts

Who Will Flunk the Stress Test?

Citi, BofA likely candidates.

The moment of truth: “After a two-month wait, the nation’s 19 largest banks will start learning on Friday how they fared in important federal examinations—and which among them will need another bailout from the government or private investors,” reports The New York Times. The government will disclose how it performed the tests this afternoon, but not publicly release the results until May 4. “Analysts are already betting that the stress tests will show that banks need to raise significant amounts of new capital, as profits made in the first three months of the year give way to more losses, tied to credit card, commercial real estate and corporate loans”—up to $1 trillion, by one estimate. Both Bank of America and Citigroup are among those expected to need more capital.