Report: Banks to get stress test results Friday

U.S. banks will be more informed by regulators on Friday how they place in government “stress tests” before the results are made public later, the Wall Street Journal reported, citing government officials.

Some estimates of the losses that may have been used in stress tests were stronger than expected, the newspaper said.

“In a less favorable scenario, which implies a 10.3 percent unemployment rate at the end of 2010, banks will have two years to calculate the losses of 8.5 percent of their first mortgage mortgage portfolio, 11% for home equity lines of credit, 8 percent for commercial and industrial loans, 12 percent of commercial real estate loans and 20 percent of credit card portfolios, “the paper said, citing a confidential document from the Federal Reserve.

On Tuesday, Treasury Secretary Timothy Geithner said most U.S. banks have enough capital to keep lending, but a pile of bad debts is to foster doubts about their health and delay recovery.

Officer of the Federal Reserve said last week that the results of tests designed to see how the nation of 19 major banks would rate the United States should be unexpectedly severe recession, will be made public on May 4.

The official said regulators will try to prove the rigor of the tests from the release of documents on Friday that explains the basic assumptions. The document will outline the methodologies employed and serve as a guide on how to interpret the results.