True, we think canned “stress tests” with negotiated findings are a joke. Still, it’s something to tell the neighbors. Neighbors who, in this case, don’t have one to tell back. Might we have a chance to see the effects of different approaches (the all-encompassing Geithner v. The “No Soup For You” Merkel) on financial crisis as the months roll by? Perhaps, if things remain as they are. Europe’s approach has been far different (partly as a consequence of a much less developed federal system) and this makes for interesting comparisons.

The U.S. government’s stress tests are fueling concerns that European banks could be falling behind in their efforts to bolster their own finances.
Unlike in the U.S., there has been no major policy initiative to force banks in Europe to increase capital cushions, and governments have intervened only on a piecemeal basis. Meanwhile, as U.S. banks pile in with efforts to raise capital from investors, European banks aren’t taking advantage of a stock rally to do the same.
“Compared to the U.S., the European banking system is rapidly being left behind,” said Philip Finch, bank analyst at UBS AG. “If anything, the rally that has taken place has allowed complacency to come back at the bank level and at the policy level.”

They don’t call it “The Old World” for nothing.
European Banks Take Stress Hit [The Wall Street Journal]