Originally published April 24, 2009 at 11:08 AM | Page modified April 24, 2009 at 12:58 PM

Fed says gov't ready to save stress-tested banks

The Federal Reserve says the government is prepared to rescue any of the banks that underwent "stress tests" and were deemed vulnerable if the recession worsened sharply.

By DANIEL WAGNER

AP Business Writer

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WASHINGTON —

The Federal Reserve says the government is prepared to rescue any of the banks that underwent "stress tests" and were deemed vulnerable if the recession worsened sharply.

The Fed says the 19 companies that hold one-half of the loans in the U.S. banking system won't be allowed to fail - even if they fared poorly on the stress tests.

The tests are intended to measure whether banks have enough capital to withstand losses on mortgages and other assets if unemployment rises and home prices fall further.

Investors had feared the tests would highlight some banks' vulnerability to failure.

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