No such thing as "bank capital" -- it's either an asset or a liability

U.S. Weighs Revealing Each Bank’s Capital Needs After Tests

2009-04-22 - Bloomberg News

"'Where there is a need for additional capital' Geithner told a congressional oversight panel in Washington yesterday ..."

Doesn't he understand there's no such thing as "capital"? There are assets & liabilities, "capital" is but an accounting conceit. The question is whether they need cash: cash to pay-off depositors right now, for "liquidity" of a solvent bank during a proverbial run-on-the-bank. Or for cash later, meaning they're insolvent and there's not going to be enough cash(flow) from assets to pay liabilities even in the probable fullness of time. ("probable fullness" being the purpose of a stress-test) In which case you don't "inject capital" you liquidate them, donating the healthy 'organs' to the deserving living.

JRB

4/22/09