Good evening.

It look’s like the bank stress tests will be out late next week.
Bank ‘Stress Test’ Results Due Next Thursday

By ERIC DASH and EDMUND L. ANDREWS
Published: May 1, 2009
Citigroup is locked in negotiations with federal regulators over whether it needs to raise as much as $10 billion in fresh capital as a result of the government’s stress test of its financial health, according to a person briefed on the situation.

But the bank may be able to plug that hole with recent and future measures to raise capital — like asset sales and a big stock conversion plan — that could leave it with more than enough funds to satisfy regulators.

The size of any shortfall hinges on how much regulators will let the bank offset its projected capital needs with actual gains in the first three quar

ters of this year. Regulators are planning to let all 19 banks taking the stress test count any gains they make through the third quarter, as they happen, toward the cushion of capital they are required to hold against a worsening recession, according to people with knowledge of the plan.

But the calculations may add another layer of murkiness to the highly-anticipated results, and could further undermine confidence in the exams themselves, by triggering a rolling reassessment of the amount of capital the banks must hold, analysts said.

Federal Reserve and Treasury Department officials said Friday they would delay the release of the stress test results until Thursday afternoon, several days later than they had originally expected, in part because some of the banks continue to disagree with the government’s initial conclusions.

Look for the market to get rocky later this next week. Also, details of the failed negotiations with Chrysler are starting to leak out. From what I heard on the Kudlow Report, the government ngotiators wanted the Union which had a $10 billion investment to get a 55% ownership share, the TARP banks that had a $10 billion investment to get a 35% ownership share, and for the bond holders (which are a primary security) who had about a $28 billion investment to be happy with only a 10% ownership. The bond holders told the government to go pound sand and they would take their chances in court.

That resulted in their getting blasted by the CIC and labeled as “speculators”.

I will not be surprised to hear them called “money changers” next.

I would not expect the GM negotiations to go any better.