The financial and banking system must be fixed before the economy can rebound and enter into a new bull market. What the government doing now mainly is to try to fix the system. The government has conducted a stress test to find out whether the 19 largest financial institutions has enough capital to withstand loss if the recession worsened. The stress test came out today. the Fed find out 10 financial institution did not pass the test. Those did not pass the test have to submit a plan to correct it before June 8. The government said that they do not allow any of these instiutions to fail. The government is trying to restore the public confidence in the financial and banking system.



In the tests, the Fed put banks through two scenarios for what might happen to the economy.

One reflected forecasters' current expectations about the recession. It assumed unemployment will reach 8.8 percent in 2010 and house prices would decline by 14 percent this year.

The second scenario imagined a worse-than-expected downturn: Unemployment would hit 10.3 percent and house prices would drop 22 percent.

The 10 financial institutions and the capital needed are: