Amex, JPMorgan, Bank of New York Mellon pass tests

May 6, 2009 3:38:29 PM PDT
At least three of the nation's 19 largest banks have passed government stress tests of their financial strength. American Express Co., JPMorgan Chase & Co. and Bank of New York Mellon Corp. will not be asked to raise more capital when federal officials announce the test results Thursday afternoon, according to people briefed on the results. The people requested anonymity because they were not authorized to discuss the results.

The stress tests were designed to see how the large banks and finance companies would fare if the economy worsens. Analysts expect about half the companies will be asked to raise capital.

Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. all will be asked to raise money, sources have told The Associated Press.

Spokesmen for New York-based American Express and JPMorgan would not comment. A Bank of New York Mellon representative did not immediately respond to requests for comment Wednesday afternoon.

Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to raise $34 billion in additional capital. The New York Times and Wall Street Journal reported the figure. The Times quoted a bank executive, while the Journal cited unnamed people familiar with the situation.

The stress tests are a centerpiece of the Obama administration's plan to stabilize the financial industry. They measure how much the banks would be hurt if unemployment rose to 10.3 percent and home prices dropped an additional 22 percent.

The government wants the firms to have enough money to keep lending even if the economy gets much worse. Officials have said none of the banks will be allowed to fold.

Shares of Bank of America rose $1.27, or 11.7 percent, to $12.11 in afternoon trading. Bank of New York Mellon shares added $1.11, or 4.1 percent, to $28.52, and American Express gained $1.03, or 3.9 percent, to $27.60.

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Lepro reported from New York. AP Business Writer Stephen Bernard contributed to this report from New York.

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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