The Obama administration will begin taking a hard look at the financial condition of the country’s 20 biggest banks this week to judge whether they could hold up even if the downturn worsens further than policy makers already expect.
These reviews of the banks’ books, known as “stress tests,” are heightening a dilemma for Obama aides about how candid they should be about the health of banks like Citigroup and Bank of America. The tests are expected to take several weeks.
Bank shares were pummeled last week, partly out of deepening fear that the government might nationalize some of the banks. Officials consider many of the top 20 banks “too big to fail.”
The stress tests come as anxiety grows among investors and industry analysts about the U.S. Treasury Department’s broader plans to shore up the overall banking system. People familiar with the plan, which has been criticized by industry executives and analysts as vague, say its crucial details may not be ready for another few weeks.