Major US banks turned to private investors today in the hopes of finding 75 billion dollars that the government said is needed for the financial sector to survive the continuing recession, according to dpa. Wells Fargo & Co, Morgan Stanley and Bank Of America Corp were launching new stock offerings to raise the capital they need to comply with the government's demands. US markets made gains of more than 1 per cent in opening trading on Wall Street Friday on the results of the so-called stress test review as well as a better-than-expected monthly jobs report. Wells Fargo raised 7.5 billion dollars in its stock offering after being told it needed to find 13.7 billion dollars in fresh capital. Morgan Stanley, which was told to raise 1.8 billion dollars, sold 3.5 billion dollars in stock. Government regulators on Thursday said a total of 10 of the 19 top banks reviewed would need to raise 75 billion dollars to survive another dip in the US economy. The capital shortages revealed by the stress tests were lower than many outside analysts had expected. Treasury Secretary Timothy Geithner said much of that could be raised from private investors, and many banks would be able to meet the government's demands by simply converting preferred shares into common equity. Bank of America Corp faces the largest task, needing to raise 33.9 billion dollars in extra capital. While the bank was hoping to sell new shares Friday, it could be forced to make the government a major stakeholder in exchange for extra support. Other top banks that were asked to raise more money: Citigroup Inc needs 5.5 billion dollars and GMAC LLC, the former financing arm of ailing carmaker General Motors Corp, must raise 11.5 billion dollars. Major banks including JPMorgan Chase & Co, Goldman Sachs Group Inc and American Express Co passed the stress tests. The government has already invested hundreds of billions of dollars in Wall Street since the financial sector was brought to the brink of collapse in September. The stress tests lie at the centre of President Barack Obama's effort to nurse the US financial system back to health, which is considered the only means of pulling the United States out of a wider economic downturn, considered one of the worst since the Great Depression. Geithner said the results would help markets get a better sense of the state of the US financial system. Most banks still had a long way to go to restore their balance sheets, which have been damaged by losses related to the housing market downturn, he said. "I think there is reassurance in clarity," Geithner told reporters. "We are at the early stages of repair and recovery of the financial system." Banks facing capital shortfalls will have until June 8 to present plans and until November 9 to meet the demands. Some are expected to make up the difference from private investors, while others will have to look for more government support.
