For a quick lesson in hypocrisy and smoke and mirrors all tied into one, how about the test that no banks can fail, and that, in any case, is based on such lax standards and assumptions that even the institution passing with high honors should give investors no comfort whatsoever? We refer, of course, to the much touted (by the Administration in any event) “stress tests,” the economic assumptions of which have already been overtaken by current conditions.
Really, it is insulting to the public to think that their confidence will be restored by some arbitrary “stress test.” We suppose that we are supposed to draw from our experience with federal standards like those “regulating” “no trans-fats” and “no calorie sweetener” claims to feel certain that the government knows what it is doing and happily go long all financial institution (since none will fail the “stress test.”)
Regulators say all 19 banks undergoing the exams will pass them. Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it.
But the tests, which are expected to be completed by the end of this month, are being conducted out of public view. Federal law prohibits the unauthorized disclosure of the results of any bank examination, including the stress tests. Some investors wonder if the new tests are rigorous enough, given the potential problems lurking inside the banking industry.
We are shocked, shocked, to discover that no banks are failing the test.
Banks Holding Up in Tests, but May Still Need Aid [The New York Times]
All part of the grand plan: bogus stress tests, mark-to-fantasy accounting standards, and soon no shorting allowed. Clearly the recovery is in place.
We all live in Lake Wobegone now
If any bank were to fail, they would have rejiggered it. The worst case scenario is probably not all that bad. The administration is all about not exposing the weak banks when it should be doing the opposite.
EP brought her A-game today. Several good posts.
They should have just drawn straws, or, more appropriately, played the Bank version of Russian roulette…
Tests where no one fails…
I’m surprised that this is new to a lot of folks here. Surely all the Ivy Leaguers here should be comfortable in this scenario.
Publik Skool Represent.
It makes investors feel good. Isn’t this just sweet?
Just like “No Child Left Behind”. This is “No Bank Left Behind”. If the teachers suck, then make the tests easier so more kids pass. If the banks suck, then make the stress test easier so no banks fail. Government 101 baby – insult the intelligence of the population until they are forced to act.
“Really, it is insulting to the public to think that their confidence will be restored by some arbitrary “stress test.” ”
Actually, it is not. Have you met the public? I have met a few members. They are quite dumb and readily susceptible to accepting any sort of pablum from the Government at this point.
@2 nice reference