Stress Test Countdown: Bank Results Due Today

May 7, 2009— -- The government will release the results of its stress tests for the nation's 19 biggest banks this afternoon, an attempt to answer the burning questions on the minds of policy-makers, investors and taxpayers alike: How healthy are the country's leading financial institutions, and will they need more cash to survive should the economy get worse?

The government has already invested hundreds of billions of dollars in the nation's financial system.

A source familiar with the matter confirmed to ABC News an earlier Wall Street Journal report that at least seven banks have been directed by the Federal Reserve to increase capital by $65 billion.

In the meantime, J.P. Morgan Chase & Co., Goldman Sachs Group Inc., MetLife Inc., American Express Co., Bank of New York Mellon Corp. and Capital One Financial Corp., will not have to raise extra cash. That decision essentially gives them a clean bill of health from the government. It's the first time the government has drawn a clear line between the healthy banks and those struggling.

The largest capital infusion goes to Bank of America: $34 billion. Wells Fargo needs to raise $13 billion to $15 billion, GMAC, $11.5 billion, Citigroup $5 billion and Morgan Stanley $1.5 billion.

Banks will have until Nov. 9 to raise the capital that regulators have determined, through the stress tests, will be needed if the recession becomes more severe.

To raise the funds, banks will have to seek out private sources of capital or accept the government's offer to convert already existing preferred stakes in the banks -- which the government acquired through the $700 billion Troubled Assets Relief Program -- to common equity.

Converting these existing investments would help provide needed capital without requiring additional taxpayer funds. But it also means that if a bank were to collapse, taxpayers would be less likely to see their investment repaid.

The idea that banks would need more money at all has raised the ire of many already-seething taxpayers.

"It's just unbelievable the amount of money that they've already got," said Trecia Harris, a bank customer in Houston. "It's like there's no end to this."

ABC News Chief Washington Correspondent George Stephanopoulos said on Good Morning America today said the administration's stress test shows that the banks are "not completely out of the woods, but they believe the government isn't going to have to go back to the taxpayers to bail out the banks."

"That clears the decks for a lot of other big items on President Obama's agenda," Stephanopoulos added.

While consumer outrage has been obvious, the health of the banks themselves has been harder to judge. Everyone knows that the ongoing recession has taken a toll on the country's biggest banks, but up until now no one has known just how dramatically they have been affected.

Treasury Secretary Timothy Geithner said Wednesday that the stress tests will be "an important next step forward" in understanding where the banks stand.

"What these results will do is they will bring in a level of transparency to bank balance sheets that will allow investors to judge, make it easier for them to raise capital, improve confidence that this system is going to be strong enough to get through this, and that will be enormously helpful," Geithner told PBS's Charlie Rose in an interview Wednesday evening. "…(I)t will help lift this fog of uncertainty over the financial system, and I think the results will be, on balance, reassuring."

The International Monetary Fund has estimated that there will be $2.7 trillion in losses on U.S. loans and securities, with the brunt of these losses being felt by the biggest banks. An industry source told ABC News that "roughly half" of the 19 banks have been told by regulators to raise more capital as a result of the tests.