U.S. Plans to Reveal Bank 'Stress-Test' Results

The Obama administration is drawing up plans to make public the results of 'stress tests' being conducted on the 19 largest banks in the country, FOX News has confirmed, a move that could help more clearly separate healthy banks from the weaklings.

The administration decided to reveal the sensitive information after concluding that keeping the findings secret could send investors fleeing from banks rumored to be the weakest, the New York Times reported overnight. But administration sources tell FOX News there is no timeframe for releasing the stress tests at this point.

Until now, the government has tried to treat all banks equally, pouring cash into both strong and struggling institutions to prop up the financial sector. The strategy has provided cover for beleaguered banks, which received funds along with their stronger brethren.

While all of the banks are expected to pass the tests, some are expected to be graded more highly than others, the Times said.

This move, combined with first-quarter bank earnings and the push by some financial institutions to raise new capital and repay their bailout funds, could lay the groundwork for a new phase in the financial crisis. Within weeks, the stronger banks could emerge free of government shackles and flush with new funds, with weaker ones still reliant on federal largesse. That would transform how investors and the government view the financial sector.

Since announcing the stress tests earlier this year, the government hasn't made clear what, if anything, would be disclosed about the assessments. The Treasury originally suggested it would defer to individual banks to disclose results. But some regulators worried about banks selectively leaking information, causing a possible bias against rivals.

The stress tests were designed to build confidence that the nation's largest banks could weather a severe and prolonged economic downturn. Regulators are trying to determine how much assistance banks might need to continue lending in such circumstances. Banks that need more capital will get six months to raise it from private investors or take cash infusions from the government.

It isn't clear precisely what information the government might disclose. It remains possible the data won't be specific to individual banks. But some within the administration believe a certain amount of information needs to be released in order to provide assurance about the validity and rigor of the assessments. In addition, these people also are concerned that the tests won't be able to fulfill their basic function of shoring up confidence unless investors are able to see data for themselves.

The Wall Street Journal contributed to this report.