Stress test banks can turn to stakeholders |

Stress test banks can turn to stakeholders

I dont know about you, but we havent followed thru on any kind of tough talk yet. Next stop? The PBGC getting a HUGE infusion!

By Karey Wutkowski

WASHINGTON (Reuters) – U.S. banks undergoing stress tests that need more capital will be encouraged to first go to their current stakeholders, possibly through conversions of preferred stakes to common equity, Federal Deposit Insurance Corp Chairman Sheila Bair said on Friday.

Bair said any banks deemed to need more capital under the tests for more adverse economic conditions should extend conversion offers to their current shareholders before seeking government funds.

“They just need to make some hard decisions and there should be some fair terms in the conversion offers,” Bair said at the Reuters Global Financial Regulation Summit in Washington. “Nobody wants the government money right now so that might be a good lever.”

http://www.reuters.com/article/GlobalFinancialRegulation09/idUSTRE53N3R020090424

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