US banks, markets, sweating "stress tests"
As early as Friday, the US government is expected to announce the results of its "stress tests" for 19 major banks - a report that could force some banks to sell ownership stakes to the US government, dpa reported.
The examination has been underway since late February, when federal banking regulators said it could provide added capital to struggling large banks, according to the results of the "stress test."
The test - a review of the health of 19 major banks - has caused jitters among investors over fears the programme could end up with the government nationalizing banks.
Federal Reserve chief Ben Bernanke has sought to calm nerves, saying the government could acquire stock in some of the banks but would be a shareholder along with private investors.
Both the US government and the Federal Reserve have pumped unprecedented hundreds of billions of dollars into struggling US banks as they try to keep their heads above a flood of failed mortgages.
The plunging US housing crisis is at the heart of the US and global financial woes - the result of too many loans made to credit- unworthy buyers and an inflated system of turning the loans into securities that were bought and sold by major banks and mortgage companies.
In calculating the health of banks, US regulators are looking at the ratio of actual capital held by a bank to its outstanding loans and other commitments.
A major issue that has divided government regulators and bankers is what makes up the "actual capital" amount. Is it just the "tangible common equity," or TCE, which refers to money raised from stock sales and quarterly profits? Or does it include governmnet bail-out money, income from selling other financial instruments or even proceeds that emerge on paper by accounting techniques?
These and other questions are expected to be addressed by federal finance officials, possibly as early as Friday or next week.