Big Banks Get Ready For Stress Tests

WASHINGTON — Federal Reserve Chairman Ben Bernanke returns to Capitol Hill for the second straight day. He’ll appear before the House Financial Services Committee.

Yesterday, Bernanke told a Senate panel the economy is currently in a severe contraction, but could climb out of recession later this year.

He says a full recovery might take 2 or 3 years.

Meanwhile, about 20 of the nation’s largest banks are set to undergo so-called stress tests. They will help regulators to judge whether the banks have sufficient capital — and the right mix of it — to hold up if the recession worsens.

Bernanke also talked down the possibility banks would be nationalized. He says that would destroy the franchise value.