Regulators Push the Banks

Wall Street Journal (03/07/08) P. C1; Enrich, David; Paletta, Damian
The Federal Reserve and the Office of the Comptroller of the Currency are urging banks to raise outside capital to help them survive the credit crunch. Washington Mutual reportedly is seeking a capital infusion following a $1.87 billion loss in the fourth quarter tied to an increase in its loan-loss reserves, but federal banking regulators hope even those banks with healthy finances will take steps to help them stay in business if the economy exhibits further weakness. According to Federal Reserve Bank of New York President Timothy Geithner, "Those institutions that move more quickly [to raise capital] will obviously be in a stronger position to deal with the challenges and take advantage of the opportunities ahead." Banks are turning to private-equity firms and sovereign-wealth funds for cash.