The relatively modest size of the hole discovered by regulators carrying out the tests, which were based on an “adverse” economic scenario, led to both applause from investors who believe the worst is over and skepticism among those who think the examination wasn’t rigorous enough.<\/p>\n
“The fears of nationalization or of failure have more or less disappeared, and now what we’re getting is details of how banks are going to fill in their capital deficiencies,” said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.<\/p>\n
The doubters believe the banks will need much more of a capital cushion than stipulated by the regulators, as the U.S. jobless rate soars and the housing market and economy takes time to pull out of a funk, driving up credit losses.<\/p>\n
“I’m a skeptic. I don’t see this as a genuine audit. They have been playing the marketing game strongly lately,” said Robert Andres, president of Andres Capital Management in Philadelphia.<\/p>\n