As credit unions debate whether or not to accept government bailout money, the ownership of big banks will be determined by stress testing, beginning tomorrow.

According to a joint statement yesterday released by the U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve Board, the group will begin evaluating "the capital needs of major U.S. banking institutions."

If stress tests indicate a capital buffer is needed, institutions will first turn to private sources of capital. If that fails, a temporary buffer will be made available from the government.

"Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time," the release stated. The group stressed "banks should remain in private hands."

The program will allow participating banks to provide the credit necessary for the stabilization and recovery of the U.S. economy, the release concluded.

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