The Obama administration plans to release some information about the health of the country's biggest banks in early May in an effort to restore public confidence in the financial sector, the White House said Wednesday.
Federal regulators are wrapping up "stress tests" at the nation's 19 largest financial institutions, and the results will be released in a "systematic and coordinated way" within a matter of weeks, said White House spokesman Robert Gibbs.
"I think, rather than these being seen as a destabilizing activity, that instead they will be seen as a stabilizing activity," Gibbs said.
Although it is expected that aggregate information about the industry's overall health will be revealed, details of exactly what will be released are still unknown. At an afternoon briefing, Gibbs said Treasury Secretary Timothy Geithner realized the need for transparency if confidence in the nation's financial system is to be restored.
"The secretary and the Department of the Treasury have long recognized that transparency was important for taxpayers, important for the banks, and important for the overall stability of the financial system," Gibbs said.
The tests are meant to show how much capital the individual financial institutions need to ride out the economic downturn. Government officials hope the banks that need still more capital can raise it through private investors. The assessments will also ensure that banks are making money available to consumers in the form of loans.
"That's one of the reasons that the stress tests have been undertaken, to ensure that banks have the capital they need, and that when and if they get this capital, that they lend that money," Gibbs said earlier this week.
Bank lending to consumers and businesses for many types of loans fell in February despite the billions of dollars in government support the banks received, according to a Treasury report released Wednesday.
Some banks that took taxpayer money are eager to rid themselves of government oversight. Earlier this week, Goldman Sachs sold $5 billion in new stock that the company said would be used to repay the $10 billion it got from the government's Trouble Asset Relief Program last fall.
Some experts saw Goldman's announcement as a way to publicly disclose the likelihood that the company would pass the stress test. The move put pressure on other financial institutions to do the same or risk investor concerns that they may be in bad shape.
The Wall Street Journal reported Wednesday that the Treasury Department initially planned to leave it to individual banks to disclose their own assessments, but regulators are worried that banks might leak information that would damage rivals.
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