Therefore, the so-called stress tests are based on computer models, which are only as good as their assumptions and inputs. The only way to grant the results credibility is for the models themselves to be published, which of course hasn't happened. In fact, current conditions already exceed the worst case scenarios in the models. [That's as of April 7, 2009, so sure, they can have rewritten and rerun the models; some stress test!]

Finally, Geither has already announced that no banks will be allowed to fail the tests. As LOLfed asks, What's the point of giving a test if you're just going to pass everyone?

If you ask yourself what would stress the banksters the most, it would be, in more or less this order: (1) accountability, (2) transparency, and (3) putting a halt to their looting (not just of the public purse, but the economy generally). So, it's really not the government stressing the banksters, but the banksters stressing Timmy, Larry, and Obama who, so far, have met or exceeded expectations by hardly stressing the banksters at all. It's all good, when looked at in the right light.

Cue the apologists!

It boils down as a battle between the bondholders and the American taxpayers. In ordinary times bondholders are sacrosanct, and first in line. But when the situation becomes Armageddon, throw ordinary times out the window.

The banks need capital; the bondholders own the debt. I say, no more taxpayer money; force the bondholders to swap the bonds for equity shares. Instantly, the banks would be reliquified, and have more capital than they need. If we reinstitute a modern version of Glass-Steagall, the banks would have only one way to make money:..... lend.

The result:
1.    Banks wouldn't have to hoard capital to make interest payments.
2.    Banks competing to lend; the economy would boom.
3.    Equity shares would sky rocket.

The problem, of course, is that bondholders have the Administration's ear, and are demanding the taxpayers take all the risk.

The mistake that Geithner made was to talk about "stress tests" because to most people this means something that gets a pass or fail.  He should have not used that shorthand phrase.  He should have said that the bank examiners were going to analyze the banks' capitalization needs.  

BAC may be a special case in light of the questionable antics of Bernanke and Paulson as exposed by Cuomo.  

So far, Geithner has proceeded in a manner consistent with taking appropriate action - find out the scope of the problem, determine capital needs, inform the banks, give them the opportunity to raise the capital within a reasonably short period of time and then take action.  

Even if you excuse the first Tarp 350 billion, taxpayer funded, panic bailout, why would you want to give them any more of our money? The public thought the money was given so the banks could start lending again, but they couldn't. They needed the capital to pay the bondholders their interest. If the public knew their money wasn't going for the purpose of kick-starting the economy (as they were lied to into believing) but to pay the fat cat bondholders their interest (yes, yes I know...China, pension funds, whatever) they might have had a slightly more animated reaction.

There is simply no justification for the Government to be involved in bailing out the banks when the principals involved have it within their ability to negotiate a Capitalist, Free Market solution.

But, of course they won't. And why should they when the Government is willing to provide all the capital, take on all the risk, while our money goes directly to the bondholders.