At this point, the big stress test at 19 of the nation’s largest banks seems like something of a joke.
For one thing, the parameters are way too optimistic. We’re already at the baseline scenario for the downturn — with no unemployment slowdown in sight — and even their extreme pessimistic scenario is really not that extreme.
Then there’s the political angle. There have been reports about Treasury-FDIC catfights (surprise!) and various leaks about when the information would be released, and how best to handle it so as not to upset investors (read: how best to withhold material information).
But if you ignore all that, then good news! All 19 banks are set to pass the stress test, according to chatty regulators speaking to the NYT.
Banks are, say anonymous officials, “broadly speaking” in better shape than was previously believed.
However those same officials also say more bailout cash will be needed, so we’re confused. Are they too weak to stay solvent, or are they in better shape than was previously believed.
Don’t let your mind get in knots over that one. Just be happy that they passed!