Bank stress tests, which assess how banks would handle it if the economy were to sour further, may make some banks more prone to lend if the results were good, analysts say. But don’t expect a miracle turnaround.
"In reality, it is still a weak economy out there," said analyst Joe Morford of RBC Capital Markets. "Whether they have the capital or not, banks are going to be cautious making loans — commercial real estate, commercial business or even residential mortgages.
"Some banks have been frozen by their fear of falling capital levels, holding onto bad loans and reluctant to sell foreclosed homes at a loss.
"Now they're not as concerned," said Stuart Plesser, bank analyst with Standard & Poor's. "If they are able to raise capital, I would assume they would get more aggressive.”
Source: Investor’s Business Daily, Marilyn Alva (05/07/2010)
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