May 11, 2009

The results of the Federal Reserve's examination of the nation's 19 largest banks don't adequately characterize the state of the financial industry, according to 75% of financial advisers responding to a question in an InvestmentNews poll.Asked Friday about the results of the government's stress tests, 564 advisers offered a variety of opinions.Of those answering the question, 61.5% said that the most significant fallout from the stress tests will be that weaker banks will merge or be acquired.

But more than 87% said that banks unable to boost capital to acceptable levels within six months should not be nationalized.When asked how the results of the tests would affect their investment advice, just 17.4% of respondents said that they would be more willing to direct client assets to financial stocks. Some 23.9% said that they would be less willing, and 58.7% replied “neither of the above.”The stress tests were designed to assess the health of the major U.S. banks and determine whether they could handle a deepening of the recession.