What do the results mean for the recovery of lending — and for the economy?
Economic recovery largely hinges on banks lending to consumers and businesses, which in turn, will boost spending and jump-start the economy. But economic recovery also depends on investors’ perception of banks’ health, and their willingness to invest in the industry. In upcoming days, it will become clearer how investors will dissect the nitty-gritty of the stress-test results. Already, some critics are saying the exercise is flawed, even though Geithner, in a New York Times op-ed Thursday — before the results were released — stressed that regulators used “exacting” loss estimates and “conservative” earnings estimates. The better-than-expected stress-test results also won’t directly boost lending, says Jim Wheeler, a partner at Bryan Cave law firm, which represents banks. “What bankers want is borrowers who can pay loans, and this doesn’t change that.” Q: How, and when, will banks pay back government bailout money? A: Banks that don’t need to raise additional capital will be able to r
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- What do the results mean for the recovery of lending — and for the economy?
