S&P: Banking Crisis Could Go on for Another 3 or 4 Years

Despite the cautious optimism creeping into the financial markets, in light of what some believe are better-than-expected results from the government stress testing of 19 large banks, Standard & Poor’s Ratings Services believes that “banks are far from a recovery, and the banking crisis has merely entered a new phase.”

"although our analytical time horizon for losses extends only through 2010 … there’s nothing to say that this banking crisis can’t go on for another three or four years." - Tanya Azarchs, managing director at Standard & Poor’s

One thing is clear, however: banks will have a tough time surviving unless they have “more capital than even Basel envisioned,” according to Azarchs... The Federal Reserve Board’s stress testing, the results of which were announced May 7, found that that 10 of the 19 largest banks need a total of $75 billion in capital to maintain at least 4% of common equity Tier 1 capital if the environment becomes a lot more adverse than experts currently expect...

Seeking Alpha: S&P: Banking Crisis Could Go on for Another 3 or 4 Years