|
|
“The U.S. government stands firmly behind the banking system”, the U.S. Treasury, the FDIC, the OCC, the OTS and the Federal Reserve Board said in a joint statement outlining more details of the capital assistance programme announced on 10 February. “The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth.”
The program will be launched on Wednesday and will include ‘stress tests’ to evaluate the potential capital needs of major U.S. banks
“Should that assessment indicate that an additional capital buffer is warranted, institutions will have an opportunity to turn first to private sources of capital”, the statements says. “Otherwise, the temporary capital buffer will be made available from the government.”
Any government capital will be in the form of mandatory convertible preferred shares, the regulators said. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares.
Capital Assistance Program as announced on 10 February