>> US Banks Stress Test Results Preview

There has been a lot of noise about the stress tests for the banks. The results are not "officially" out yet, but lets have a look at what the media outlets seem to have so far:

• 16 of top 19 banks are technically insolvent? {HSBC is an american bank?}
• Keefe, Bruyette & Woods' own stress test: the industry could need $1 trillion additional capital to meet regulatory definition of "well capitalized"

The stress test results are officially out in May, and:

• The Fed's methodology for the stress-test 
• The govt is pushing banks to act now
• The US Treasury Dept delayed the results of the stress tests for the post-earnings season

From a recent reuters report:
U.S. regulators want the top 19 banks being stress-tested to have at least 3 percent tangible common equity(TCE), according to a source familiar with the regulatory talks.

3%TCE for $1 of tangible assets = 33x leverage.

Here's what OptionArmageddon's results of running the stress tests look like (pay special attention to the L2(mark to model) and L3(mark to imagination) assets as a multiple of TCE column as well :

(Chart courtsey OptionArmageddon.com)

Related post: >> Mark to market to Mark to imagination : blame the doctor