May 05, 2009

Investors are optimistic that results of stress tests on the nation's 19 largest banking companies will show the industry is basically sound, even though a handful of banks such as Wells Fargo might need to raise more capital.But critics say the tests downplay the banks' bad assets, which are making it hard for them to resume normal lending. And at least one analyst reports that the federal government will "quietly move on" to stress test the next 20 to 30 largest U.S. banks, which would include Salt Lake City-based Zions Bancorp.

As regulators prepare to reveal how banks fared on the stress tests -- a key part of the government's plan to fix the financial system -- investors seem ready to take the news in stride because the government has said none will be allowed to fail.Officials will announce Thursday how the 19 largest banks fared on tests of how much they would lose if the recession unexpectedly worsened. If the test found a bank's reserves would fall below a minimum level, that bank would have to raise more capital beyond what's now required.