US set to reveal 'stress test' results May 7

WASHINGTON: Authorities will reveal on May 7 results on "stress tests" conducted on the 19 biggest US banks that have received public aid to weather the global financial crisis, a government source said Friday.

The results of the tests of the banks' capacity to withstand a worse-case scenario of the current recession will be published after the stock market close Thursday, the source told AFP on condition of anonymity.

The tests are being conducted by the Federal Reserve and other regulators at the request of the US Treasury.

The Fed, in releasing details of the tests on April 24, had indicated it would release their results in the week beginning May 4.

According to the government source, the tests should reveal information about the 19 banks as a group, as well as details on each individual bank.

In its April 24 statement, the Fed noted that regulators were assessing whether the banks could withstand a 3.3 per cent annualized contraction in the economy in 2009.

The US Commerce Department on Wednesday said the world's largest economy shrank 6.1 per cent in the first quarter, marginally better than the 6.3 per cent annualized pace in the final quarter of 2008.

Markets have been buzzing with anticipation about the results, with some speculation that they could be revealed as early as Monday.

But media reports Friday said the government would delay the results, sparking jitters on Wall Street.

"Apparently several banks cited as needing more capital are contesting the results and conclusion of the stress test and the government is giving them more time to make their case," said stock market analyst Fred Dickson at DA Davidson & Co.

"Our conclusion is after seeing big moves in their stock prices over the last eight weeks, several of these 19 banks are vulnerable to a sharp short-term pullback. We remain very cautious on the entire group of the 19 banks included in the stress-test universe."