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WASHINGTON (Reuters) – U.S. regulators are preparing a public guide to bank “stress tests” to explain their methodology and how to interpret industrywide results, sources familiar with the planning told Reuters on Tuesday.
The sources said it is unclear exactly when the “concept paper” will be released, but it is anticipated it will be before the U.S. Treasury Department announces aggregate results at the end of April or the beginning of May.
“It will be a framework to understand the results,” one of the sources said.
U.S. regulators are conducting stress tests at the 19 largest U.S. banks such as Citigroup (C.N), JPMorgan Chase & Co (JPM.N) and Wells Fargo (WFC.N), to determine their capital needs if economic conditions were to deteriorate further.
The banks have completed their internal versions of the tests, but they have not yet seen the examiners’ version of how they fared, the sources said.
The markets are anxiously anticipating the outcome of the tests. The results are expected to further highlight which banks are on their way to recovery and which institutions will need further government assistance.
Regulators are still working on a process by which the government can release industry-wide results and banks can release their own results, in an orderly way, the sources familiar with the policymakers’ talks said.
The Treasury and Federal Reserve have instructed banks to not talk about the stress tests during the first-quarter earnings season, which is scheduled to wrap up for most of the major banks by April 24, sources said last week.
They said officials are concerned that too much chatter from the banks about the stress tests could muddle the markets’ reaction to the earnings.
Officials from the U.S. Securities and Exchange Commission have been involved in the discussions, because it is still unclear if the stress tests will trigger a disclosure requirement, the sources said on Tuesday.
“The question is whether the results of the stress tests are more like a bank exam or a significant event,” one of the sources said.
Banks are not permitted to release the results of regulatory examinations, which include a 1-to-5 rating of their overall health.
Officials have said they recognize the intense interest surrounding the results, and want to be as transparent as possible while still ensuring that the results are not leaked in a chaotic way.
“There will be definitely be some information that will be provided at the end of it, but exactly what that will be, and when it will be provided, will come forth later,” Comptroller of the Currency John Dugan, who supervises some of the nation’s largest banks, said last month.
The document being prepared by regulators will be designed as a guide to interpret the government’s industry-wide disclosure, the sources said.
(Reporting by Karey Wutkowski with additional reporting by Glenn Somerville; editing by Tim Dobbyn)