INSTANT VIEW: Biggest banks need $74.6 bln in capital

NEW YORK (Reuters) - U.S. regulators told top banks on Thursday to raise $74.6 billion to build a capital cushion officials hope will restore faith in financial firms and set a course out of the deepest recession in decades.

KEY POINTS: * The results of bank "stress tests" -- which involved more than 150 regulatory officials poring over the books of the 19 largest firms -- effectively drew a line between healthy and weak, and quantified exactly how much those institutions struggling under the weight of souring loans must raise. * The bank reviews, led by the Federal Reserve, showed 10 banks needed additional capital to withstand heavier losses that would likely come if the recession worsened. * Bank of America Inc had the largest need at $33.9 billion, while Citigroup Inc needed $5.5 billion.

COMMENTS:

GAVIN GRAHAM, DIRECTOR OF INVESTMENTS, BMO ASSET MANAGEMENT, TORONTO:

"If one is looking for a reason why the very strong rally that we've had might take a breath, here you have it. Financials have been leading it, and now some of the ones that have moved the most are going to be coming to you for substantial amounts of stock."

"The stress test is useful in seeing that not all banks are the same. Everyone knew that was the case, and that some were in bigger trouble than others -- now we actually have proof of that. The rebound we've seen in all banks was wide spread and undiscriminating, like the selloff.

"They leaked it (test results) so intensively that there's not really a great deal to learn."

ROBERT ANDRES, PRESIDENT, ANDRES CAPITAL MANAGEMENT, PHILADELPHIA:

"I'm a skeptic. I don't see this as a genuine audit. They have been playing the marketing game strongly lately. The President, Geithner and Bernanke, they are trying to build the momentum of confidence. They are kicking the can down the road to stall for time."

"I don't know how serious investors will look at these data. The other side of this is that people don't want to borrow. Look at the drop in consumer credits."

"There is no doubt that Bernanke is right until the financial system is put back in place. The financial system has made some steps of improvement that kept us from a systemic collapse, but it doesn't necessitate we have an economic recovery."

"Everyone wants good news here. I think it's a plus but the market has to look at this and say what kind of data we are getting. We need time to assess this. They did this in two months and with 150 examiners."

"I think the (stock) market being too high and the (Treasury) bond market offers an opportunity because the Fed will play the quantitative easing game. Right now, bonds offer a more attractive valuation to me."

ANDY BUSCH, CHIEF FOREX STRATEGIST, BMO CAPITAL MARKETS, CHICAGO:

"The surprise is not the size of the shortfalls, but the fact that the banks are immediately out there in the market trying to raise capital to cover the losses. And they may be right. After this rally, this could be the best moment to do it."

"Reaction in markets is going to be mixed. For some banks, such as Citigroup, the figures were smaller than expected. For Wells Fargo and Morgan Stanley, the situation is different."

KATHY LIEN, DIRECTOR OF CURRENCY RESEARCH, GFT FOREX, NEW YORK:

"Overall, the results are in line with expectations. The market is relieved that this huge event risk is over and therefore currencies are seeing a bit of risk appetite."

ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT CORP, CHICAGO:

"It seems to me that the leaks were very accurate, so there doesn't seem to be any major surprises here. The fears of nationalization or of failure have more or less disappeared, and now what we're getting is details of how the banks are going to fill in their capital deficiencies. Some have already announced common stock offerings, and we're going to hear more about capital raises, but this issue of capital will begin to fade into the background.

"The results should end the concerns about failure or nationalization. You shouldn't hear, as we did a month ago, that Citigroup or Bank of America will be nationalized. That should disappear.

"I think that to jump from, that the banks aren't going to fail, to that they're great stocks to own is a big leap. I don't think you can make that statement, but I think the fundamental reason why they've received so much attention is because their collapse would've create a ripple effect which was going to take down a lot of American businesses. That concern is gone, but I don't think people should interpret that as that these are great stocks to buy."

HOWARD SIMONS, MARKET STRATEGIST, BIANCO RESEARCH, CHICAGO:

"The numbers here are not a particular surprise. As a matter of fact the total is identical to what we'd tallied up... The distribution is a little bit different... There is no real downside surprise."

KIM RUPERT, MANAGING DIRECTOR OF GLOBAL FIXED INCOME ANALYSIS, ACTION ECONOMICS LLC, SAN FRANCISCO

"It seems like most of it was pretty much known. I guess it is pretty much good news in that we didn't have any real negative surprises from the leaks that we've seen through the week."

MATT MCCORMICK, PORTFOLIO MANAGER, BAHL & GAYNOR INVESTMENT COUNSEL, INC., CINCINNATI, OHIO:

"It seems a classic case of buy on the rumor and sell on the news today. The main thing that I'm looking at here is, the line about reviewing leadership. I think there's going to be some changes at the top for these companies, as we saw with GM.

"Where my concern is, is that the government is again micromanaging these banks. A lot of these guys are improving. The issue here comes down to control: Will they allow some banks to remove themselves from TARP? Will they let the true winners come out and play?"

MARKET REACTION: STOCKS: U.S. stock index futures pare gains BONDS: U.S. Treasury debt prices steady at lower levels DOLLAR: U.S. dollar holds gains versus yen, losses versus euro