In Washington, the Treasury Department may disclose results of the stress tests it is conducting for the nation's 19 largest banks, The New York Times reported. Banks will have until May 4 to digest the news privately, giving them nine days to discuss the details in the comforts -- or discomforts as the case may be -- of their board rooms. After that, the results will be made public, the Times said.
For nine days the delicate balancing act will include how much noise can be kept under lock and key and how much boardroom maneuvering will reveal before May 4.
Analysts already conclude banks relying on the strength of their investment banks or leaning hard on consumers, namely Citigroup Inc. and Bank of America, will be near the bottom of the pack. Banks that took huge subprime mortgage hits in 2008 and backfilled their positions, namely Goldman Sachs and Morgan Stanley, should fare well. Custodial banks like Bank of New York Mellon and State Street Corp., should also do well, the Times said.
In other rooms in Washington, sources say Chrysler LLC is set to file for bankruptcy protection as early as next week, no matter which way negotiations turn.
The Treasury has struck a deal in principal with the United Auto Workers union, which is concerned about pensions and healthcare benefits in the event Chrysler does file, the Times said. Fiat, the Italian automaker with designs on the U.S. market and fallow Chrysler plants is now said to be considering a purchase of General Motor's Corp.'s Opel, leaving Chrysler to fend for itself.
Fiat Chief Executive Officer Sergio Marchionne said recently that "Chrysler is my first and foremost objective." He has also not had direct talks with Opel, he said.
In the background, Chrysler is reportedly assembling a new offer for creditors, a group of 50 bank and hedge funds with most of the punch represented by JPMorgan Chase, Morgan Stanley, Citigroup and Goldman Sachs. In recent negotiations, the Treasury offered the group $1.5 billion to cover $6.9 billion in secured debt, a far cry from what creditors want.
In several other rooms Washington lawmakers, including influential committee chairmen Sen. Christopher Dodd and Rep. Barney Frank, are considering a letter sent by New York State Attorney General Andrew Cuomo asking for an investigation into Bank of America's acquisition of Merrill Lynch, which closed in January.
Cuomo is concerned about former Treasury Secretary Henry Paulson Jr. and Federal Reserve Chairman Ben Bernanke's role in the affair that began with his investigation into Merrill Lynch bonus checks.
Cuomo now asks if regulators crossed the line by allegedly urging Bank of America Chief Executive Officer Ken Lewis to keep quiet about the negotiations, even as he discovered escalating losses at Merrill Lynch.
Copyright 2009 by United Press International.
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