It was already clarified by the Treasury that the result of the test will not be "pass" or "fail" but rather, "How much capital does this bank need in order to meet the credit needs of its borrowers?"Earlier there were reports that the Treasury may not release the results of the individual banks so as to avoid any nervousness in the markets.
Also there are concerns that the "worst case scenario" used in the stress test is not "worst" enough, and thus the projected capital requirements may rather be understated.With the results for the first quarter and the stress tests, investors will be in a much better to distinguish between the healthy banks and the weaker ones.
While some of the smaller banks have already repaid TARP funds, some other bigger ones will repay after the stress tests show that they do not need federal funds.
Goldman Sachs has already launched a $5 billion offering of common shares to the public, the proceeds of which will be used to repay TARP funds.At the same time, as the recent results of the some of the banks have shown, the losses in consumer and commercial real estate loan portfolios have risen sharply in the last quarter, in addition to the housing loan losses, and we suspect that many banks will be required to raise capital soon after the stress test results
