WASHINGTON — Virtually all of the 19 largest U.S. banks have passed the Obama administration’s controversial "stress test" with ease. [1]
"I’m going to turn my back, and when I turn around one of you 19 guys will have volunteered for the suicide mission by stepping forward," said the Sergeant. Then he turned around and chose the one guy who hadn’t been paying attention and therefore hadn’t stepped back.
UPDATE: Hat tip to the Implode-O-Gang for this. Now that must have been a tea party!
This supported "End the Fed" rallies that were held on Saturday.
…………………………..
Look who didn’t get the memo about everything being ducky with the big banks 
WASHINGTON (MarketWatch) – Lawmakers should create a new federal authority to help unwind large systemically significant institutions, according to a key bank regulator on Monday. "We need a new resolution regime for large financial institutions," said Federal Deposit Insurance Corp. Charwoman Sheila Bair at the Economics Club of New York. … [3]
Clearly not all the banks are kaput or they’d have been nationalized by now, and at least one is insolvent or we wouldn’t be going through this farce. So it looks like this week is going to be a no-holds-barred free-for-all of leaks, shorting and self-serving rumors. The first truck-load of codswallop [2] has already hit, and it’s only going to get worse.
Meanwhile, Doom has been thinking a lot about the Unexpected Hanging Paradox (except for Igor, who’s down by the moat studying leaky induction ). Anyone see a way Treasury and the Fed can orchestrate their Dance of the Nineteen Veils so as to anoint the sound institutions without condemning the turkeys? hint: Tim & Ben & Co. aren’t going to make any smart remarks about dipping bread in the salt bowl, ’cause that would implicate all 19.
Welcome to Doom’s Monday Open Thread, where nothing’s OT. Let us know if you can parse the unparseable, because there’s gonna be a lot of disingenuous in the lead-up to the official obfuscation.
————————
[1]: "Fed says U.S. banks breezed through stress tests: But the actual results, known only to the 19 institutions and Washington, won’t be public until May 4", by Barrie McKenna, Toronto Globe & Mail, April 25, 2009.
[2]: "Stress Tests Show One Bank Would Need More Capital", by Albert Bozzo, CNBC, April 25, 2009.
What’s more, analysts say the tests face a fundamental credibility issue. The tests can neither be too tough nor too soft or the outcome might be suspect; at the same time, some have speculated that at least one bank would have to come up short.
[3]: "Bair: New entity needed to unwind big institutions", by Ronald D. Orol, MarketWatch, April 27, 2009.
The stress test was ridiculous and unnecessary when at the same time the treasury admitted that it would “assist” any bank that didn’t pass.
John, you and I have had the conversation of compounding interest being a long term mathematical show stopper for a slow or no-growth economy.
Creating the need for additional compounding interest as a means to curtail a problem that was created in large by compounding interest, is to put it mildly; insane.