Banks

The nation's biggest banks are regaining their health, but some need to replenish their coffers to withstand any new difficulties, the government said in an upbeat report Thursday. The Federal Reserve's highly anticipated "stress tests" found that 10 of the 19 largest banks needed to bolster their capital by a combined $75 billion. Most of that must be raised by two banks with a large California presence -- Bank of America Corp. and Wells Fargo & Co.

Eight large banks face will be fined by regulators for foreclosure abuses, the Federal Reserve official said Monday. The banks -- EverBank, Goldman Sachs, HSBC North America, OneWest Bank, MetLife, PNC Financial Services Group, US Bancorp and SunTrust Banks -- face sanctions for "unsafe and unsound practices in their loan servicing and foreclosure processing," the Fed said. No fine amounts were released Monday. But the Fed believes "monetary sanctions are appropriate" for the banks, Suzanne G. Gillian, the agency's senior associate director in the Division of Consumer and Community Affairs, told a congressional hearing in New York on Monday.  She did not say when the exact fines would be announced.

U.S. banks are relaxing their terms on credit cards and lending for autos and commercial real estate, according to a Federal Reserve survey. "Domestic banks, on balance, continued to report having eased their lending standards across most loan types over the past three months," the Fed said Monday in its quarterly survey of senior loan officers. Banks in the United States are lending the most since the recession ended in June 2009, supporting an economy burdened by 8.3% unemployment.

LONDON - Ireland sealed a deal with the European Central Bank on Thursday to ease the crippling cost of its public bailout of failing banks, keeping the country on track to wean itself from international emergency loans. By overhauling repayment of the debts it incurred to rescue its banks, Ireland will be on track by the end of 2013 to be able to borrow money on the open market the way most other governments do. It was effectively shut out of those markets at the end of 2010, when the gaping hole ripped into its budget by the bank bailout forced Dublin to go cap in hand to its European partners and the International Monetary Fund.

Joining a growing number of municipalities, the Los Angeles City Council on Tuesday adopted a "responsible banking" ordinance that will require banks doing business with the city to disclose detailed data on loans and foreclosure activity by community. Much of the information is already reported under federal law but can be hard to find in voluminous federal banking reports, said Miguel Santana, city administrative officer. The new law would bring the information together on a city website that the public could search by census tract, he said.

Big banks' cost of borrowing money from one another has fallen to record lows in recent days, another sign that the financial system is inching closer to normalcy. A key short-term interest rate for banks -- the three-month London interbank offered rate -- slid to 0.79% on Monday from 0.83% on Friday and 1.05% three weeks ago. LIBOR is what banks pay to borrow from one another.

NEW YORK - Investors are selling off shares of major U.S. banks in midday trading on Wall Street, following news of JPMorgan Chase & Co.'s stunning $2-billion trading loss. While major indexes were initially down in early trading, all had turned positive three hours after the opening bell. The Dow Jones industrial average was up 42 points, or 0.3%, to 12,897. The Nasdaq was up 19 points, or 0.7%, to 2,953. JPMorgan's stock, however, was down sharply - losing $2.82, or 7%, to $37.92 a share.

A U.S. regulator sued a number of major banks Friday over losses on more than $41 billion in subprime mortgage bonds, which may hamper a broader government mortgage settlement with banks. The lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, came as a surprise to the market and weighed on bank shares. The lawsuits could add billions of dollars to the banks' potential costs at perhaps the worst possible time for the industry. The FHFA accused major banks, including Bank of America Corp, its Merrill Lynch unit, Barclays Plc, Citigroup Inc and Nomura Holdings Inc of selling bonds backed by mortgages that should have never been packaged into securities.

WASHINGTON -- While the majority of banks have improved their finances during the last four years, looming economic threats mean the outlook for the industry remains negative over the next 12 to 18 months, Moody's Investors Service said Tuesday. "Our negative outlook ... reflects a challenging domestic operating environment, with prolonged low interest rates, high unemployment, weak economic growth and fiscal policy uncertainties," said Sean Jones, Moody's senior vice president. "Additionally, the threat of contagion stemming from the European sovereign debt crisis undermines economic recovery in the U.S. and exposes banks to a heightened risk of shocks," he said.

Government tests on the financial health of the nation's major banks are causing significant stress on Wall Street and in Washington, where bankers and officials fear that the release of highly anticipated information may do more harm than good. The Obama administration is finding itself in a potentially no-win situation as it prepares to release details Friday about the methodology used in the tests, and at least partial results May 4.