The Peak piques interest of 4,500 potential buyers

The Peak piques interest of 4,500 potential buyers

Most of the potential buyers who turned up at the showroom for The Peak yesterday were keen on four- and five-room flats.

POTENTIAL buyers yesterday thronged the showroom for The Peak @ Toa Payoh, a new project built under the Design, Build and Sell Scheme (DBSS).
Four thousand five hundred viewers turned up at the showroom at yesterday’s launch, said Ms Kellie Liew, executive director of projects at HSR Property Group, the marketing agent for The Peak.

Most were keen on four- to five-room flats, citing location and HDB grants as factors influencing their decision.

Ms Cerise Chiew, 24, a teacher, hopes to buy a five-room unit. ‘I can get a first-timer HDB grant. Toa Payoh is quite a good location and, if you want to sell in the future, you can get a higher price.’

Service crew member Sharon Ye, 26, was looking at four- and five-room units for her cousin. She said DBSS projects trumped private properties, as owning a private property meant losing out on many benefits, like Public Utilities Board bill rebates and town council subsidies.

Salesman Sam Tan, 38, was considering applying for a four-room flat to be near his mother. He is also eligible for a first-timer grant. He said he would pick a DBSS unit over one in a condominium since he would not use condo facilities, such as a swimming pool or a gym, but would still have to pay maintenance fees.

A few property hunters drew a comparison with Natura Loft, a DBSS project in Bishan, saying prices at The Peak were lower and the location more accessible. But some were not as convinced, including businessman Richard Lim, 37. ‘I’m not going to buy because the room size is very small. I can get a 99-year condo unit for about the same price but bigger.’

Interested buyers have until April 28 to apply for the 1,203 available units.

JOANNA SEOW

Source : Straits Times - 16 Apr 2009

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HDB prices on their way down

HDB prices on their way down

One-third of sales in the first quarter at or below valuation

By Jessica Cheam

GOOD news for home buyers eyeing the resale flat market: About one-third of HDB sales in the first quarter were struck at or below the flat’s valuation price.
The level in some areas was far higher. In Sengkang, for instance, up to three in four five-room flats sold by ERA Asia Pacific were done at or below valuation.

This means those buyers did not need upfront cash to buy their dream home.

Analysts say the trend indicates HDB flat prices are now coming down at a quicker rate after holding up better than many private residential properties.

In the recent market boom, many sellers sought prices well above valuation - a figure set by an independent valuer.

Buyers can use Central Provident Fund savings to pay for a flat only up to its valuation amount. They must stump up cash for any premium they pay above valuation.

The property agencies surveyed by The Straits Times, HSR Property Group, PropNex, ERA Asia Pacific and C&H Realty - which together account for almost the entire HDB market - said a significant 30 per cent to 40 per cent of first-quarter sales were done at or below valuation.

The agencies’ data showed prices crumbling for bigger flats such as five-roomers and executive flats. In Clementi, for instance, a five-room flat was sold for $70,000 below valuation at $500,000, while an executive flat in Tampines sold for $65,000 below its valuation at $515,000.

Industry observers say the HDB market, whose price trends typically lag behind those of the private sector, is finally reflecting the weakened economy.

Recent flash estimates showed HDB prices dipped 0.6 per cent in the first three months, compared with the fourth quarter of last year. It is the first fall since 2006.

Demand for resale flats has eased as the recession bites, while the HDB has been ramping up the supply of new flats, said Chesterton Suntec International head of research and consultancy Colin Tan. Home buyers also have more options now as prices of mass market condominiums are more affordable, he added.

ERA associate director Eugene Lim said home hunters were reluctant to pay more than $500,000 for HDB flats.

‘The longer these highly priced flats stay on the market, the more over-exposed they become. Consequently, some had to be sold at big discounts due to buyer resistance,’ he added.

The balance of power has now clearly shifted from sellers to buyers, with analysts saying this could be the time for buyers to do some bargain-hunting.

ERA’s first-quarter data showed that in locations such as Sengkang, a whopping 74 per cent of transactions for five-roomers were done at or below valuation. In Tampines, they accounted for 55 per cent while, at Jurong West, it was 42 per cent.

Even for smaller flat types like three-roomers in Ang Mo Kio and four-roomers at Woodlands, 42 per cent to 44 per cent of sales were at or below valuation.

Experts point out that while more flats are now selling below valuation, this does not mean people are selling at a loss as HDB prices rose a hefty 31.2 per cent in the property boom of the past two years. But first-time buyers, priced out of the resale market during the boom, will now find the flats more affordable.

The current discounts to valuation will eventually diminish when valuations catch up, which usually takes three months, said Knight Frank director of research and consultancy Nicholas Mak.

But there is a possibility of valuations and price falls chasing each other, further eroding prices, he said.

Source : Straits Times - 16 Apr 2009

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Army remains arbiter of Thai democracy

Army remains arbiter of Thai democracy

Crackdown on red shirts brings its role in politics again into sharp focus

By Nirmal Ghosh, Thailand Correspondent

ONCE again, the Royal Thai Army has been out on the streets of Bangkok, fully armed and securing critical areas of the seat of power in Thailand.
After weeks of blockading the Prime Minister’s office and two days of rioting, anti-government ‘red shirt’ protesters decided on Tuesday that to back down and disperse was the wiser course of action.

The military had warned that it was prepared to move in on those protesters encamped outside Government House. And, unlike the feeble response shown against the protesters in Pattaya, it signalled this time it meant business. Troops in Bangkok answered volleys of petrol bombs by the demonstrators with tear gas rounds, baton charges and the firing of guns, even if it was over the heads of mobs.

By putting down the red shirt protest and shoring up the Abhisit government, the Thai army is once again in the spotlight, with its role in politics in sharp focus.

Thai army officers’ primary loyalty is to the King. The military’s godfather, now-Privy Council president Prem Tinsulanonda, made that abundantly clear when in 2006 he famously compared the military to a racehorse and governments to jockeys who come and go.

And the the owner of the racehorse? The King.

In a commentary this week, Australian academics Andrew Walker and Nicholas Farrelly noted that the army first deployed around Chitralada Palace, the King’s residence in Bangkok.

‘It was a routine security measure but, in the current climate, it was an act rich in symbolism. No one imagines that the red shirts posed any immediate threat to the security of the King, but Thailand’s supreme institution is being inexorably drawn into battles about who should legitimately run the country.’

That the army obeyed orders and deployed in Bangkok also dispelled any doubt as to which side it is on.

In Thailand’s colour-coded struggle for power, the royalist ‘yellow shirts’ have the military’s backing, not the red shirts loyal to ousted prime minister Thaksin Shinawatra.

Last year, the army stayed out of the fray when pro-Thaksin governments declared states of emergency after yellow-clad People’s Alliance for Democracy (PAD) protesters occupied Government House and shut down Bangkok’s two airports.

This week, the army cracked down on protesters, the first time it has done so since 1992.

While arguably the government had little choice but to take steps to restore law and order, it is inevitable that this will entrench the image of the army as a suppressor of the people among the red shirts and other Thaksin loyalists in the country’s northern rural regions.

Thailand has a history of military coups, and the role of the army in intervening in political and ideological conflicts in the name of national security is well-established.

After the September 2006 coup d’etat that threw out Thaksin, the military-appointed interim prime minister Surayud Chulanont was asked by The Straits Times if the army was to remain the final arbiter of Thai politics. The general’s reply: ‘I don’t see anything to keep the military out of politics if we cannot actually have a real democratic society.’

But it would be simplistic to see the military as monolithic.

Thai society’s deep divisions over the country’s epochal conflict is mirrored in the army. A Thai colonel involved in the operations of recent days confided in the Straits Times that as a Thai, he was deeply conflicted about having to take sides in the current polarised - and now increasingly radicalised - environment.

It is significant that many of the units put into action in Bangkok were under the command or influence of three powerful generals - army chief Anupong Paochinda, General Prawit Wongsuwan, and General Prayuth Chan-ocha, who is tipped to succeed General Anupong when he retires next year.

Loyalty networks run deep in the army, and between the military and civilian elites. In fiddling with the networks to keep the army off balance, Thaksin ended up antagonising members of the top brass instead.

Another factor led to the Abhisit government’s decision to deploy the army: The police cannot be trusted.

The police are largely in favour of the red shirts and they suffered an enormous loss of face last year after being blamed for the accidental death of a female PAD supporter, whose funeral was attended by the Queen.

Thaksin was once a police lieutenant-colonel, and he has relatives in the force.

At Bangkok’s Lumpini police station in recent weeks, the television sets have been almost constantly tuned to the pro-Thaksin D-station TV channel.

At the red shirts’ blockade of the Sri Ayutthaya intersection in front of Thailand’s Ministry of Foreign Affairs on Monday, some red shirts were seen sitting in a police pickup truck which was being driven by a man in red.

While there are internal divisions in the army, given Thailand’s history, analysts do not rule out a direct army takeover or coup d’etat mounted by a few bold generals or senior officers.

But the army cannot be unaware that a military coup can boomerang. It is far better to be in control with a friendly government in charge.

The current upheavals are a backlash to the Bangkok elites’ moves to destroy Thaksin and his power network. This week the unhappy masses struck at the establishment and were repelled.

Said the army colonel: ‘This is just a milestone, it is nowhere near the end. We are trading punches.’

The army remains firmly in the ring.

Source : Straits Times - 16 Apr 2009

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Home sales remain strong

Home sales remain strong

More than 1,000 private homes sold for the second month in a row in March

By Joyce Teo, Property Correspondent

THE bumper private property sales recorded in February were no fluke.
For a second straight month, home hunters defied the weakening economy to buy more than 1,000 units last month.

Property consultants say buyers are attracted to what they regard as good buys in the moderately priced mass market.

Still, they warn that these strong buying levels are probably not sustainable.

Last month, property developers sold 1,220 new private homes, just shy of the 1,332 units sold in February.

It was the first time in over a year that the market has seen two consecutive months with more than 1,000 units sold. Sales for both months were a stunning contrast to the dismal 108 in January.

Another striking figure: First-quarter new private home sales hit 2,660 units, representing 62 per cent of all new homes sold during the whole of last year.

February sales - boosted mainly by two new launches Alexis and Caspian - were the highest since August 2007.

Figures compiled by the Urban Redevelopment Authority also showed 832 new housing units were launched last month, compared with 1,072 units in February and just 204 units in January.

Most units sold last month were in the mass market, along with a few city-fringe small-format apartments at condominiums such as Domus and The Mercury.

HDB upgraders were the hottest group of buyers. CBRE Research said that last month alone, they bought 550 to 600 units at mass market projects such as Caspian, Double Bay Residences, Kovan Residences, Livia, Mi Casa and The Quartz at median prices of $610 per sq ft (psf) to $740 psf.

A survey of first-quarter caveats lodged for this market segment indicated an average price of $695,000, said CBRE Research executive director Li Hiaw Ho. ‘This is probably a good time for HDB home owners to upgrade to private property as the price gap between private properties and HDB resale flats has narrowed.’

Said Colliers International director for research and advisory Tay Huey Ying: ‘Developers have lowered their price expectations for new launches and generally cut prices of unsold units. Buyers are biting as there is pent-up demand.’

The top three sellers in March were Double Bay Residences, Mi Casa and The Arte. About 85 per cent of units sold last month were priced below $1,000 psf, said PropNex chief executive Mohd Ismail.

The high-end showed some life with 70 units launched and some sales, including one Orchard Scotts unit at $2,220 psf.

But overall, only 100 prime units were launched in the first quarter, or just 4.7 per cent of all units launched, well down from the 39.4 per cent of all units launched in the fourth quarter last year.

Knight Frank director of research and consultancy Nicholas Mak said this was partly due to the retreat of foreigners from the luxury market.

Preliminary data suggests foreign deals stood at 16.8 per cent in the first quarter - a level last seen when Sars badly hit the market in 2003, he said.

Market analysts say it is a good start to the year, but they do not expect the strong buying to continue long-term.

‘In the short term, this rate of buying can continue provided developers lower or maintain their prices,’ Chesterton Suntec International’s research and consultancy head Colin Tan said of March sales.

But in the long term, it is not sustainable, he said. ‘The last time the market sold so many new units (14,811 units) was in 2007. That was when the deferred payment scheme was available. And it has since caused indigestion in the top end of the market.’

Unless the Singapore economy and employment market improve significantly this year, only 6,000 to 7,000 new private homes are expected to be sold, said Mr Mak.

He said healthy demand for mass market homes is likely to continue only as long as average HDB resale prices do not fall by more than 7 per cent year on year.

‘Many in the mass market segment are buying now and banking on their future earnings to service their loans as they are afraid of missing the boat,’ said Mr Mak.

Source : Straits Times - 16 Apr 2009

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Are risks on the downside or upside?

Are risks on the downside or upside?

THE headlines on the Singapore economy yesterday were as bad as they could get: ‘Government flags 6-9 per cent contraction’. If that kind of GDP contraction comes to pass, it will be the worst for the republic in more than four decades. Since 1960, there have been only four years during which the economy contracted: 1964, 1985, 1998 and 2001. The contractions were 3.8 per cent, 1.4 per cent, 1.4 per cent and 2.4 per cent respectively - small compared to what is forecast for this year.

Despite the dire forecast, stocks ended broadly higher yesterday. The Straits Times Index is now some 31 per cent off the low touched a month ago. So at this point in time, where do the risks lie for investors - on the upside or downside? The stock market, of course, is a discounting machine; it discounts what is expected, and the expectation is that the worst is over. Private-sector economists took comfort in the 17 per cent year-on-year fall in March non-oil domestic exports, which wasn’t as bad as what the market had expected. And compared with February, it was a strong 11 per cent rebound - marking the second straight month of increase. But Singapore and the world are still highly dependent on the US as the engine of global economic growth. And data from there are still mixed. The Producer Price Index, a measure of inflation, fell 1.2 per cent in March, against a 0.1 per cent increase in February. Last month, retail sales fell by 1.1 per cent, against a revised January increase of 0.3 per cent. Economists had predicted a 0.3 per cent rise in sales for March. And in his speech to the nation, US President Barack Obama tried to temper the market’s recent gains. ‘2009 will continue to be a difficult year for America’s economy,’ he said, warning of more job losses, foreclosures and pain before the recession ends.

Hence, companies with healthy finances are in a quandary. Should they pursue acquisitions and invest in new projects now or wait for clear signs of a lasting recovery? Certainly, opportunities abound now: valuations are low, competition from private equity firms is light, governments are more accommodating and sellers are more willing. On the other hand, if the recession proves prolonged, prices may go lower and cash is best conserved to weather the downturn.

According to consulting firm McKinsey’s, the S&P 500, at around 800 points, is trading at a discount of 30-40 per cent from a scenario that most resembles the course of previous recessions - when there is no permanent loss of GDP and the economy will resume real long-term growth of 2.5-3 per cent. Also, in past recessions, the stock market rebounded from the trough much more quickly, yielding cumulative returns of 50-130 per cent, over the two years that followed the trough.

On this evidence, the risk would appear to lie more on the upside. And companies which wait for clear signs of recovery may, in the words of the consulting firm, be ‘recklessly cautious’. Thus, while protection against the downside should be kept in place, now might be the time for companies to explore opportunities as well.

Source : Business Times - 16 Apr 2009

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URA launches tender for Short Street hotel site

URA launches tender for Short Street hotel site

FOR the first time since September last year, the Urban Redevelopment Authority has launched a public tender to sell land.

The tender for the 99-year leasehold hotel site at Short Street in the Bras Basah-Bugis district will close on June 10.

The 12,535.6 sq ft site is ideal for a boutique hotel development located in an area with a ’synergistic cluster of arts, culture and education facilities’, URA said in its release. The site is also near the future Rochor MRT station.

The site can accommodate a 12-storey hotel with about 90 to 100 rooms.

URA released the plot, which was on the reserve list of the Government Land Sales Programme, following a successful application by an unnamed party who has committed to place a minimum bid at the tender of $8.8 million, which works out to about $200 per square foot of potential gross floor area (GFA).

Singapore hotels are facing dual pressures of a global tourism slump, denting demand for rooms, as well as an increase in supply coming onstream.

On Monday, CBRE Hotels (Asia-Pacific) executive director Robert McIntosh said that going by the Singapore Tourism Board’s forecast of nine million to 9.5 million visitors for this year, the average occupancy rate for Singapore hotels will decline from 81 per cent in 2008 to 71 per cent this year, while the average room rate will fall between 12.5 and 15 per cent this year.

Singapore has close to 10,000 rooms in the four- and five-star categories slated to come onstream by end-2012.

Source : Business Times - 16 Apr 2009

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Singapore ranks second-lowest for job satisfaction

Singapore ranks second-lowest for job satisfaction

By JOYCE HOOI

SINGAPOREANS have long been suspected to be a dissatisfied bunch - and now there are numbers to add to that view.

In Robert Half’s latest survey of finance professionals, Singapore ranks second-lowest worldwide for job satisfaction, with only 53 per cent of local respondents claiming to be satisfied with their job.

Ironically though, their dissatisfaction may stem largely from their uncertainty over being able to keep their job.

Ranked third-lowest worldwide for satisfaction with job security, only 54 per cent of local respondents said they were satisfied with job security in their current position.

‘As job losses continue to mount, concerns about job security, career prospects and the ability to maintain a work-family balance as workload increases are heightened,’ said Tim Hird, managing director of Robert Half Singapore.

‘During these tough times, managers must demonstrate strong leadership in managing their staff, to not just allay their concerns but also to motivate and encourage them and keep overall employee morale high.’

Other Asians are not much happier in their jobs than Singaporeans, forming a regional theme of dissatisfaction. Bringing up the rear on the job satisfaction front, Japan ranked the lowest globally at 47 per cent, while Hong Kong was third-lowest at 54 per cent.

Worldwide, finance professionals in Dubai were the happiest job-wise, with 85 per cent claiming to be satisfied.

Singapore’s finance professionals also scored low on company loyalty, with 59 per cent of them saying they felt ‘very loyal’ or ‘rather loyal’ to their firm.

The only other countries in the survey that ranked lower than Singapore on this count were Hong Kong and Japan with 42 per cent and 21 per cent respectively.

Not surprisingly, only 11 per cent of local respondents said they plan to stay in their current job for the next 12 months, the smallest proportion worldwide.

Forty per cent are either actively looking for another job or plan to do so in the next 12 months. In Hong Kong - the only country to outrank Singapore in this area - 45 per cent of respondents plan a job change.

In Singapore, the main reason cited for a job switch was an increase in pay, for which 35 per cent indicated they would walk. A better work-life balance came in a distant second, with 21 per cent of respondents citing it is the reason for a job change.

‘Especially in these uncertain times, we are advising both our clients and candidates to focus less on monetary compensation packages but more on the content and scalability of jobs,’ said Mr Hird.

The survey was conducted by the consulting firm in October last year. It involved 3,556 finance professionals globally, 200 of whom were in Singapore.

Source : Business Times - 16 Apr 2009

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Govt-backed loan approvals hit a high

Govt-backed loan approvals hit a high

1,415 loans worth $764.1m given the nod in March, pushing total loan amount past $1b

By CHEN HUIFEN

THE number of government-backed loans approved last month hit a record high with 1,415 loans worth $764.1 million getting the nod from participating financial institutions.

This has pushed the total amount of loans approved so far past the billion dollar mark, with more than 2,700 loans valued at $1.3 billion dished out so far.

The New Bridging Loan Programme was the most popular scheme in March, having attracted 610 approvals representing $500 million worth of funding. It was more than three times the 182 approvals obtained in February.

‘The Bridging Loan Programme is popular because it provides the much-needed working capital in these challenging times,’ said Henry Lee, a financial adviser to small and medium-sized enterprises (SMEs) under the Financial Facilitator Programme. ‘Companies especially appreciate that they can get up to $5 million with minimal collateral.’

But the loan insurance scheme (LIS), typically for exporters, continued to have the greatest number of approvals to date. The 343 approvals garnered by the scheme last month pushed the total number of LIS applications getting the green light to 865, corresponding to $510 million in loan value.

SMEs accounted for 90 per cent of the 2,781 government-backed loans approved since the government launched a slew of enhanced business financing initiatives in December last year. About 35 per cent of the loans went to firms with annual sales turnover of $1-5 million, 34 per cent went to those with annual sales turnover of less than $1 million.

About 10 per cent of the loans were made to companies with $5-10 million in annual sales turnover, and the remaining 21 per cent was for businesses with more than $10 million in turnover.

Overall, the total loan value approved in March was more than double the $332.4 million approved in February.

The programmes are part of a concerted effort by the government to help ease the credit tightening that started late last year. A $2.3 billion enhanced financing package was launched in December and was swiftly followed by a $5.8 billion Special Risk-Sharing Initiative in January. A financial facilitator programme (FFP) was also subsequently introduced to help SMEs navigate the application process.

Source : Business Times - 16 Apr 2009

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UN summit to question US dollar as reserve currency

UN summit to question US dollar as reserve currency

(UNITED NATIONS) A United Nations summit meeting in June will most likely discuss whether the world should abandon the US dollar as the top reserve currency, a senior UN official said on Tuesday.

The president of the UN General Assembly, left- wing former Nicaraguan foreign minister Miguel D’Escoto Brockmann, has invited the leaders of the 192 UN member states to attend a conference on the global financial crisis from June 1-3.

‘There is the whole problem of the creation of special drawing rights (SDRs) and perhaps doing away with the dollar as the currency for international reserves,’ Mr D’Escoto told reporters.

‘I am sure that that will be one of the things that heads of state will want to discuss (at the summit),’ he said, adding that many countries had lost their trust in the dollar.

China and Russia have called for a sweeping overhaul of the global monetary system that would enhance the use of the SDR, an international reserve asset created by the International Monetary Fund in 1969 that has the potential to act as a global reserve currency.

The proposals by the emerging economic powers reflect concern with the primacy of the dollar as the main reserve currency.

The IMF has said the dollar’s status as the dominant reserve unit is not under threat. Russia has said that introducing an international reserve currency to dislodge the dollar could curb the volatility of foreign exchange markets.

Mr D’Escoto said he was sending out letters on Tuesday to the leaders of all 192 UN member states urging them to attend the summit. He said he was sending a special personal letter to US President Barack Obama asking him to come to the summit.

It was not immediately clear how many leaders would attend.

The summit has strong backing from the so-called Group of 77 developing states, including China, Mr D’Escoto said.

UN officials say the summit is also a response to the recent summit of the G-20 club of big developed and developing economies in London.

Separately, Federal Reserve chairman Ben S Bernanke said the dollar will stay the world’s reserve currency for the foreseeable future.

‘The dollar remains the dominant currency in terms of reserve holdings and international transactions’ and ‘I don’t see any prospect of it changing in the foreseeable future,’ Mr Bernanke said in response to a question after a speech in Atlanta. — Reuters

Source : Business Times - 16 Apr 2009

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US to reveal some sensitive details of banks

US to reveal some sensitive details of banks

Non-disclosure may cause investors to flee from those judged to be weak

(WASHINGTON) The Obama administration has decided to reveal some sensitive details of the stress tests now being completed after concluding that keeping many of the findings secret could send investors fleeing from financial institutions rumoured to be weakest.

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

Officials have deliberately left murky just how much they intend to reveal - or encourage the banks themselves to reveal - about how well they would weather difficult economic scenarios over the next two years.

As a result, indicating which banks are most vulnerable still runs a risk of doing what officials hope to avoid.

The decision on how to handle the stress tests underscores the delicate balancing act by the government, which has spent hundreds of billions to stabilise banks.

Despite some signs of improvement in the financial system, however, many economists remain concerned that banks are still weighed down with toxic assets stemming from the housing downturn.

Until now, the Treasury Department has simply said that it would reveal the amounts of any new infusions of capital into banks that regulators judged to be at risk if the economic downturn was prolonged, or the economy took a further dive.

The administration’s hand may have been forced in part by the investment firm Goldman Sachs, which successfully sold US$5 billion in new stock on Tuesday and declared that it would use the proceeds and other private capital to repay the US$10 billion it accepted from the government in October.

That money came from the Troubled Asset Relief Program (TARP) and Goldman’s action was seen as a way of pre-disclosing to the markets the company’s confidence that it would pass its stress test with flying colours.

Goldman’s action has put pressure on other financial institutions to do the same or risk being judged in far worse shape by investors.

The administration feared that details on healthier banks would inevitably leak out, leaving weaker banks exposed to speculation and damaging market rumours, possibly making any further bailouts more costly.

The Goldman move also puts pressure on the administration to decide what conditions will apply to institutions that return their bailout funds. It is unclear if Goldman, for example, will continue to be allowed to benefit from an indirect subsidy effectively worth billions of dollars from a federal government guarantee on its debt, a programme that the Federal Deposit Insurance Corp (FDIC) adopted last autumn when the credit markets froze and it was virtually impossible for companies to raise cash.

In ordinary times, regulators do not reveal the results of bank exams or disclose the names of troubled banks for fear of instigating bank runs or market stampedes out of a stock. But as top officials at the Treasury and the Federal Reserve focused on the intensity with which the markets would look for signals about the nation’s biggest banks at the conclusion of the stress tests, the administration reconsidered its earlier decision to say little.

‘The purpose of this programme is to prevent panics, not cause them,’ said one senior official involved in the stress tests who declined to speak on the record because the extent of the disclosures are still being debated. ‘And it’s becoming clearer that we and the banks are going to have to explain clearly where each bank falls in the spectrum.’

Two senior government officials said on Tuesday that they were now likely to encourage the banks to reveal a range of information, perhaps including the size of losses that the banks could suffer under each of the stress scenarios. — NYT

Source : Business Times - 16 Apr 2009

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