{"id":192140,"date":"2009-05-06T22:38:00","date_gmt":"2009-05-07T03:38:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2009\/05\/06\/its-official-the-stress-test-was-just-theater\/"},"modified":"2009-05-06T22:38:00","modified_gmt":"2009-05-07T03:38:00","slug":"its-official-the-stress-test-was-just-theater","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2009\/05\/06\/its-official-the-stress-test-was-just-theater\/","title":{"rendered":"It’s Official, the “Stress Test” Was Just Theater"},"content":{"rendered":"

We are getting reports now<\/a> of what Timothy “Eddie Haskell” Geithner’s stress test has determined, and it’s clearly not reality.<\/p>\n

\n\n\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n
Bank<\/strong><\/td>\n

<\/p>\n

 Needs
Capitalization<\/strong><\/td>\n		Amount<\/strong><\/td>\n

<\/tr>\n

Bank of America <\/td>\nYes<\/td>\n$34 B<\/td>\n<\/tr>\n
Wells Fargo<\/td>\n

<\/p>\n

Yes<\/td>\n$15B<\/td>\n

<\/tr>\n

Citigroup<\/td>\n

<\/p>\n

 Yes<\/td>\n $5B<\/td>\n

<\/tr>\n

Morgan Stanley<\/td>\n

<\/p>\n

 Yes<\/td>\n $1-2B<\/td>\n

<\/tr>\n

Goldman<\/td>\n

<\/p>\n

 No<\/td>\n\n

<\/td>\n

<\/tr>\n

MetLife<\/td>\n

<\/p>\n

 No<\/td>\n\n

<\/td>\n

<\/tr>\n

JP Morgan Chase<\/td>\n

<\/p>\n

 No<\/td>\n\n

<\/td>\n

<\/tr>\n

Bank of NY Mellon<\/td>\n

<\/p>\n

 No<\/td>\n\n

<\/td>\n

<\/tr>\n

American Express<\/td>\n

<\/p>\n

 No<\/td>\n\n

<\/td>\n

<\/tr>\n

Capital One<\/td>\n

<\/p>\n

 No<\/td>\n\n

<\/td>\n

<\/tr>\n

BB&T<\/td>\n

<\/p>\n

 No<\/td>\n\n

<\/td>\n

<\/tr>\n

<\/tbody>\n<\/table>\n<\/div>\n

This is a damn joke.<\/p>\n

You have one “oh my God” number, for Bank of America, and it’s about 50% of their market cap, but Citi, which is clearly in much worse shape is somehow better capitalized by a factor of 6.<\/p>\n

This is simply not true, even after BoA’s disastrous acquisition of Merrill Lynch and Countrywide.<\/p>\n

Also note this joint statement from the Treasury Department, Federal Reserve, FDIC, and Office of the Comptroller of the Currency<\/a>, which, to my untutored eye, appears to say that they are<\/span> going to go with their cockamamie scheme to claim that capital is increased by swapping preferred for common stock.<\/p>\n

It’s an accounting trick, and what’s more, it’s one where the taxpayer has just taken a second<\/span> haircut.<\/p>\n

They are making great theater by pretending to talk tough and giving a month for the banks that need to to present a plan to raise capital<\/a>, and 6 months to have this plan in action, but it’s all a lie, since the plan may very well be, “suck on this, taxpaying rubes”.<\/p>\n

I disagree with former IMF chief economist Simon Johnson’s analysis<\/a>, which is that they are selectively leaking to create confusion in order to keep people from looking at whether the test was too hard on the banks.<\/p>\n

I think that his analysis is incomplete. The “stress test” begins and ends with public relations. It’s a sham, and it has always been a sham, intended to show that the government was serious about reigning in the big banks, without actually engaging in the necessary actions, like seizure of insolvent institutions<\/span> that would actually be required for it to work.<\/p>\n","protected":false},"excerpt":{"rendered":"

We are getting reports now of what Timothy “Eddie Haskell” Geithner’s stress test has determined, and it’s clearly not reality. Bank NeedsCapitalization Amount Bank of America Yes $34 B Wells Fargo Yes $15B Citigroup Yes $5B Morgan Stanley Yes $1-2B Goldman No MetLife No JP Morgan Chase No Bank of NY Mellon No American Express …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,1004,985],"tags":[],"class_list":["post-192140","post","type-post","status-publish","format-standard","hentry","category-corruption","category-finance","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/192140"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=192140"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/192140\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=192140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=192140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=192140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}