Extraordinary paragraph on the “stress tests” from Option Armagedon. You would love it, it’s so true and sad at the same time. But we have to confront the reality, there is no other way of working this crisis out..
“This is pure comedy. We already know the stress tests are an exercise in “garbage-in, garbage-out” modeling and that they are designed so that all of the 19 institutions being tested will pass. Unless and until insolvent institutions are seized and liquidated nothing will be solved. But the political class has demonstrated no desire to solve the problem; they’d prefer to bury it as long as possible. The administration knows (or should know) the truth regarding financial institution insolvency. Bottom line: The “stress test” is a whitewash designed to declare these institutions temporarily illiquid (as opposed to permanently insolvent) thereby justifying perpetual bailouts.”
Bank regulators clash over stress test disclosure (Bloomberg)
The U.S. Treasury and financial regulators are clashing with each other over how to disclose results from the stress tests of 19 U.S. banks, with some officials concerned at potential damage to weaker institutions.
With a May 4 deadline approaching, there is no set plan for how much information to release, how to categorize the results or who should make the announcements, people familiar with the matter said. While the Office of the Comptroller of the Currency and other regulators want few details about the assessments to be publicized, the Treasury is pushing for broader disclosure.
read full article on Bloomberg
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