Banks Get Regulators' OK on Capital Plans

Updated from Monday, June 8

Federal regulators gave their blessing to capital-raising plans for the 10 banks ordered to bolster their balance sheets after government stress tests completed last month.

The brief announcement from the Federal Reserve said supervisors of the Supervisory Capital Assessment Program will work with the banks to ensure the plans are put into place "quickly and effectively." It was silent about whether regulators would give the green light to several banks that were not required to raise capital and had applied to repay federal investments made through the Troubled Asset Relief Program.

"The 10 banking organizations required by the [program] to bolster their capital buffers have all submitted capital plans that, if implemented, would provide sufficient capital to meet the required buffer under the assessment's more-adverse scenario," the two-paragraph statement late Monday from the Fed said.

Results of government stress tests at the biggest 19 banks determined that 10 of them would need to raise nearly $75 billion in additional funds to prepare for a worst-case economic scenario. But even the weakest banks have had surprising ease in raising capital, and many have exceeded individual targets.

The excess cash is expected to go toward paying back funds from the Troubled Asset Relief Program, which nine banks have applied to do, and several others have expressed interest in doing as soon as possible.

Those that have applied to redeem the TARP investment are JPMorgan Chase (JPM Quote), Goldman Sachs (GS Quote), Morgan Stanley (MS Quote), American Express (AXP Quote), BB&T (BBT Quote), State Street (STT Quote), Northern Trust (NTRS Quote) and HF Financial Corp. (HFFC Quote).