Bank Stress Test Release Date: May 4th

From Bloomberg:U.S. Aims to Release Bank Stress-Test Results May 4

The Federal Reserve and other regulators aim to release the results of stress tests on 19 of the biggest U.S. banks on May 4, a central bank official said.

Regulators also plan to publish a paper on their methods on April 24, according to the official. The May 4 results will include any plans for boosting capital to weather a deeper economic downturn, the person said.

Procedures for releasing information on specific firms, including whether the banks themselves or the supervisors will release the results, are still under discussion. The Securities and Exchange Commission, which sets rules for what publicly traded companies must disclose to investors about their financial condition, is involved in the talks, the person said.

The goal of publishing the stress-test methods is to bolster credibility of the assessments, which will expose weaker banks and may boost confidence in stronger ones.
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Baseline Scenario

The baseline forecast projected a 2 percent economic contraction and an 8.4 percent jobless rate in 2009, followed by 2.1 percent growth and 8.8 percent unemployment in 2010.

An “alternative more adverse” scenario had a 3.3 percent contraction in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth and 10.3 percent jobless in 2010.

Economic output fell at a 5 percent annual pace in the first quarter, according to the median estimate in a Bloomberg News survey. The unemployment rate rose to 8.5 percent in March, a 25-year high, and the amount of industrial capacity in use fell to a record low of 69.3 percent.

“There is a sense that the worst case is becoming the base case,” said Siefers. “People are starting to view double-digit unemployment as a foregone conclusion.”