The banks ‘stress test’ deal seems, at least in my view, a little blurry since regulators haven’t so far specified the statistical distributions they are using. From that perspective alone the exercise is not only unhelpful but suspicious as well. In any event – here is the latest on the subject from Bloomberg.
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 … If all the banks pass, the tests’ credibility will be questioned, and if some banks get failing grades and are forced to accept more government capital and oversight, they may be punished by investors and customers.
A statement on the methods is scheduled for release April 24….How the market handles the results is a chief worry of banks and regulators.
How markets will respond to the ‘stress tests’ once results get released is anyone’s guess. One thing is highly probable ; after May 4th co. heads at several of the largest banks in the nation will start (figuratively speaking) to roll.
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