February 26, 2009

The Obama administration’s much- anticipated stress test for the nation’s wounded banks may not live up to its name.“It’s not going to be onerous,” said Nancy Bush, bank analyst and founder of Annandale, New Jersey-based NAB Research LLC. The government is trying “to quell the downward spiral that we’ve seen in some of these stocks to get the whole situation stabilized.”

By analyzing the health of the 19 largest U.S. banks, including Citigroup Inc., the recipient of $45 billion of federal money, regulators assume that the economy will shrink as much as 3.3 percent this year, followed by growth of 0.5 percent in 2010, and that unemployment will rise as high as 8.9 percent and 10.3 percent, respectively. That may not be pessimistic enough to truly test the banks, analysts and economists said.