by Calculated Risk on 5/17/2009 08:59:00 PM

From the Financial Times: Smaller US banks need additional $24bn

Small and medium-sized US banks must raise some $24bn to meet the capital standards set by the government in its stress tests of large institutions, research for the Financial Times shows.

News of the potential capital shortfall could increase pressure on many of the 7,900 US banks that form the backbone of the US financial system.

As many as 500 more banks could close, according to investment bank Sandler O’Neill ... The government’s stress-case would result in capital shortfalls for 38 per cent of the 200 banks below the 19 largest financial institutions ...

Unlike the large banks, it appears these banks will be forced to merge or allowed to fail (and taken over by the FDIC).