JECKYLL ISLAND, Georgia (Reuters) - Government "stress tests" of how 19 major banks would endure a sharp downturn in the economy already appear to be helping banks gain access to private capital, a key element in economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday.
"The initial indications are encouraging," he told a conference organized by the Atlanta Federal Reserve Bank.
"Many of the banks are well ahead in finding private-sector options for increasing their common equity, and several have announced plans for new equity issues," he said.
Another positive sign in the aftermath of the tests is that several banks have announced plans to issue long-term debt not guaranteed by the Federal Deposit Insurance Corp, Bernanke said.
Even so, the Fed chairman cautioned it will be "some time" before it is possible to say whether the exams, which put banks' portfolios through bleaker-than-expected scenarios for economic output, unemployment and house price declines, will fully restore investor confidence and assure banks' access to private capital.
The Fed and other regulators announced last week that 10 of the 19 firms tested would need to raise an additional $74.6 billion to be adequately buffered against the worst-case scenario.
"We hope that in two or three years we will be able to reflect on the banking system's return to health with a sharply diminished reliance on government capital," he said.
(Reporting by Mark Felsenthal and Alister Bull; Editing by Leslie Adler)
