US To Unveil Bank Stress-Test Results May 4

The results of tests to gauge how the top 19 U.S. banks would fare should the deep U.S. recession worsen will be publicly disclosed on May 4, a regulatory official said on Thursday.

The so-called stress test results will include a capital recovery plan for banks that regulators determine would be short of capital if the economy's downturn gathered steam and unemployment shot unexpectedly higher, the official said.

Read the whole story: Reuters

Comments

[Ironquill]

11:16 PM on 04/16/2009

There are four games of chicken being played in the banking industry, which is way over capacity.

1. Banks with each other.

2. Banks and O's Treasury Dept.--meaning he himself.

3. Banks and the Fed regulators.

4. Obama and many of his supporters--the would-be angry populists.

Not to mention the financial industry vs. the investors who are wrapped up in this stock market rally.

This is a dicey situation, to say the least. I think that O's Treasury Department, in fact, he, must show some claws right about now in regard to the banks, or lose a lot of credibility.

[MetalCanuck]

09:34 PM on 04/16/2009

These test are nothing, the government can't test its masters.

[Carolab]

05:48 PM on 04/16/2009

JP Morgan held over $90 Trillion (notional value) in derivatives -- they were the LEADERS in derivatives trading.

Bear-Stearns, WaMu, Lehmans and Merrill Lynch were ALL done to "save" JP Morgan.

Check it out.

[Carolab]

06:00 PM on 04/16/2009

JP Morgan posts $5B in 'Derivatives Profits"

The opening of [Bloomberg's] article leaves out one huge product segment of the Fixed Income Derivatives product group, CDS. In fact this is a huge oversight, the OCC source shows that banks have an 87 trillion OTC derivative exposure which includes fixed income derivatives and states that of the 16.1 trillion of outstanding credit derivatives, 99% are CDS. Why did Bloomberg not come out and be forthright about 20% of the derivatives market?

With AIG posting $60 billion in losses in the last quarter, there had to be someone on the other side of those trades who would claim a commensurate gain. As of Q3 of 2008, according to the OCC, there are only 5 major CDS broker US banks who hold 87% of the outstanding notional credit exposure. JPMorgan is one of them. Thus when the government provided $60 billion capital to AIG in order to meet collateral requirements for its counterparties, one can infer that the ultimate recipient was JPMorgan, and other major CDS dealers.

The government is providing AIG with funds not just to keep AIG afloat but to support all of AIG’s counterparties from the systemic risk of not getting paid. But in providing this liquidity, the government is allowing JPMorgan to mark profits from bailout money originating at another firm and while they hold on to the TARP money they received from the government.

http://seekingalpha.com/article/124321-jpmorgan-counting-bailout-money-as-profit

[PhilipTaylor]

05:31 PM on 04/16/2009

Will tis be all the DETAILS?

Or a one paragraph Geithner Edited Summary?

[PhilipTaylor]

05:32 PM on 04/16/2009

****this****

[jojony]

05:01 PM on 04/16/2009

Wall Street has won. Period.

[Carolab]

05:49 PM on 04/16/2009

Senator Byron Dorgan almost nine years ago tried to stop the Deregulation that lead to this CRISIS saying it would cause Taxpayer Bailouts.

His Agenda for this Wall Street Banking Crisis:

1. Expand TARP oversight, accountability and transparency to other Programs. Require all government agencies providing financial assistance (Not just TARP) to private firms to follow the same set of rules, including monthly reports to Congress detailing how the taxpayers' money is being spent.

2. Require all firms receiving emergency financial assistance to be subject to the same conditions as the recent automotive rescue initiative;

a. Prohibit bonuses or golden parachutes for executives
b. Prohibit the payment of dividends
c. Reforms to prevent engagement in reckless actions that caused this crisis
c. If a to c are NOT followed, then companies immediately pay back all loans/government assistance.

3. Create a Taxpayer Protection Prosecution Task Force. Any person, company or entity that has benefitted from financial wrongdoing must be investigated and prosecuted to the full extent of the law. Require Attorney General to immediately establish a task force to prosecute and recoup money from financial fraud cases that contributed to the collapse of the financial markets.

4. Establish a Financial Market Investigation/Reform Commission that will examine how the financial collapse and credit crisis happened, and report back to Congress with recommendations on how a crisis of this magnitude can be prevented in the future.

http://dorgan.senate.gov/issues/economy/taxpayer-protection-act/index.cfm

[GnomeDigest]

02:47 PM on 04/16/2009

In regards to these "Stress Tests" (Dog and Pony shows), I keep hearing them say "These tests are designed to inspire confidence". Well the only way results would inspire confidence, would be for the results to paint a picture of banks that showed them to be fairly healthy. If a test is designed to achieve a specific result, is there any point to the tests other than a PR stunt?

Wouldnt that be like a teacher preparing an end of year exam and saying "These tests are designed for everyone to pass".

[Weirdwriter]

03:18 PM on 04/16/2009

The confidence will be in the process of correctly assessing bank efficiency and strength, rather than on relying on their PR departments to tell us how they're doing.

[ssfahrer]

12:20 AM on 04/17/2009

I don't think so: these "stress tests" are designed solely so the banks can FAIL THEM--so that Obama and his Socialist conspiracy (Treasury Department, Federal Reserve, Executive Branch, etc.) can have an excuse to take over ALL the banks! There will be such a run on the banks-- this time it will be called "Barack Monday" (instead of "Black Monday" as it was on October 28, 1929)....