WHEN: Wednesday, September 7th
WHERE: CNBC's "Squawk Box"
Following is the unofficial transcript of breaking news from CNBC's Kate Kelly. All references must be sourced to CNBC.
KATE KELLY: MICHELLE THANKS SO MUCH. CNBC HAS LEARNED THAT BANK REGULATORS HAVE ASKED A SERIES OF MAJOR BANKS TO REPORT BACK TO THEM ON WHAT THEIR CAPITAL RAISING PLANS WOULD BE IF THEY WERE TO GET INTO SOMETHING OF AN EMERGENCY MARKET SITUATION. NOT UNLIKE WHAT WE EXPERIENCED IN THE FALL OF 2008. IN RECENT MONTHS, MAJOR BANKS, NOT JUST BANK OF AMERICA, AS REPORTED BY THE WALL STREET JOURNAL ON FRIDAY, HAVE BEEN ASKED BY BOTH THE FED, THE FDIC, THE OCC AND OTHERS, TO STRESS TEST THEIR BALANCE SHEETS AGAINST THESE FALL CONDITIONS AMONG OTHER SCENARIOS AND REPORT BACK TO REGULATORS ABOUT WHAT THEY WOULD DO IN TERMS OR RAISING CAPITAL IF THEY NEEDED TO DO SO QUICKLY AND URGENTLY. BOFA AS REPORTED BY THE JOURNAL, HAS SUGGESTED AMONG OTHER THINGS THAT THEY MIGHT INTRODUCE A MERRILL LYNCH TRACKING STOCK TO RAISE ADDITIONAL CAPITAL, BUT OF COURSE THAT BELEAGUERED BANK IS IN THE MIDST OF RAISING CAPITAL IN OTHER WAYS INCLUDING THROUGH WARREN BUFFETT'S RECENT INVESTMENT, AND ALSO THROUGH THE SALE OF A CHINESE LENDER, WHICH THEY OWN ABOUT A TEN PERCENT STAKE. SO, THE RESULTS CAME IN WITHIN RECENT WEEKS AND MONTHS AND THE REGULATORS ARE REVIEWING THEM I UNDERSTAND. THIS FROM WHAT I HEAR, IS MORE THAN JUST STANDARD OPERATING PRACTICE. IT'S A COUPLE OF STANDARD DEVIATIONS BEYOND THAT AND AS YOU CAN SEE FROM THE 2008 COMPARISON, THE REGULATORS WANT TO SEE SOMETHING OF DIRE CIRCUMSTANCES AND HOW BANKS WOULD REACT. HAVING SAID THAT, I DON'T THINK THIS IS A ONE OFF SITUATION BY ANY MEANS. THIS SEEMS TO BE SOMETHING THAT THE FED AND OTHERS ARE GOING TO BE DOING ON A SOMEWHAT REGULAR BASIS NOW THAT THEY HAVE BEEFED UP THEIR OVERSIGHT OF THE BANKS IN THE WAKE OF THAT FINANCIAL CRISIS GUYS. SO, MORE DETAILS AS I GET THEM.
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