How many stress tests can fit on the head of a pin?

As many as you want, if the books are cooked.

Stress tests are done on a squid pro quo basis.

Five year horizon. Includes US in the test. I think these people want to know.

burnside wrote:

I think these people want to know.

I think these people already own their two largest banks.

Anyone been reading about BlackRock and its ties to the US treasury/FED.

Oh yeah vote in my Poll I know It kinda sucks I should close it but vote NE wayz

Why conduct stress tests? To fool people into thinking you actually have a valid purpose.

[Fed.] Governor William J. Le Petomane: We've gotta protect our phoney baloney jobs, gentlemen!

Tim waiting for 2012 wrote:

Anyone been reading about BlackRock and its ties to the US treasury/FED.

Yup, they are in deep. Lots of no-bid contracts. Sort of like the modern day Haliburton.

Good odds Timmy will end up there after this.

Plantagenet wrote:

Why conduct stress tests? To fool people into thinking you actually have a valid purpose.

that was my thought. What is the point? Just another waste of time and resources.

I wonder if the stress test includes a scenario where the government delays foreclosures for ANOTHER two years and the banks are holding RMBS with 80% delinquency rates marked to model assuming 75% of delinquent borrowers will cure.

first i gotta figure how to get to the polls....

Labor Market: States, Cities Likely to Slash Jobs As Stimulus Dwindles - CNBC *

"State and local payrolls peaked in August 2008. Between then and January 2010, 191,000 jobs have been lost, three-quarters of them at the local level.

If those numbers seem small, consider that by one estimate, some 256,000 government jobs have been saved by stimulus funding."*

BlackRock Hires Ex-Treasury Hand Wilson - WSJ.com

BlackRock Inc. is adding a former U.S. Treasury official and well-known investment banker to its executive team as it seeks to digest a major acquisition and manage $3.3 trillion of client assets.

Kendrick R. Wilson, 63 years old, will join the New York-based money manager Feb. 1 as vice chairman and will have a broad role supporting client relationships and advising the management team, BlackRock said on Friday.

Like BlackRock itself, Mr. Wilson has been heavily involved in financial-crisis recovery efforts. As an adviser in the Treasury Department from August 2008 to January 2009, he had broad responsibilities, including helping to field suggestions and pleas for help from market participants, he says.

He previously held senior investment-banking roles at Goldman Sachs Group Inc. and Lazard Freres & Co.

Ghost . Nice find

two days ago

rosethorn wrote on Mon, 3/8/2010 - 9:49 pm

"Help me out here; weren't the stress tests widely derided as a sham back when they were taking place? "

from over at naked capitalism

(btw i take umbrage with the authors cavalier use of the term mock

who does he think he is

The fake stress tests

A post by Edward Harrison

About a month ago I wrote a post called “The coming wave of second mortgage writedowns” the gist of which was that the big four banks (Citi, JP, BofA, and Wells) had a shed load of exposure to now worthless second mortgages. With many first mortgages now hopelessly underwater, it stands to reason that second mortgages on those same properties have zero value.

The big four are certainly well aware of this problem and are looking for ways to extend the wherewithal of underwater borrowers and pretend they don’t need to take losses on these loans. On paper, these companies are very well capitalized. However, in the real world, the likely losses they must eventually take on loans already on their books would probably render them insolvent. This is what I hinted yesterday in my post on the stress tests.

I said:

I would say the stress tests were a mock exercise to instil confidence in the capital markets. This was important first and foremost because it would induce private investors to pay for bank recapitalization instead of taxpayers. But it was also important for the economy as a whole as the sick banking sector was dragging the whole economy down. The key, however, is that the tests were a mock exercise. Despite the additional capital, banks are still hiding hundreds of billions of dollars in losses in level three, hold to maturity, and off balance sheet asset pools. If asset prices fall and/or the economy weakens, all of this subterfuge would be for nought.

The fake stress tests « naked capitalism

so yes the stress tests are not worth the paper they are printed on imho, becasue of all the mark to fantasy and hidden crap

there is much more to the post about the fake stress tests, including tables with interesting numbers

that show the sham claim of 14% on seconds

is so much BS loss is really much bigger

read the rest if you like at naked capitalism link above

Usual suspects

And this is nearly two years ago. Of course, nothing has happened. Bread and circuses.

US lawmaker eyes BlackRock role in Fed's Bear deal
| Reuters

We live in a kleptocracy, why do we even care about stress tests anymore? Last gaasp rules allow banks to lie and hide. The federal reserve can pretend it is solvent. And godman sacks is worshipped by the buffitologists. Financial cops are sent cowering. And we Americans fear to tread where braver men have died.

How awful of me to forget this pedigree:

"Fisher went to Concord Academy--where he became friendly with Caroline Kennedy--and then to Harvard College and Harvard Law. He took a job at the New York Fed, where he became a favorite of Fed chief William McDonough. There Fisher made his first mark, resolving the collapse of Long-Term Capital by organizing a $3.6 billion bailout from Wall Street's biggest institutions."

The new stress test scenarios should include sovereign default, municipal downgrades, and large FX movements.

Pelosi: "now you see why we need to pass Obamacare, so we can find out how it deals with stress"

"A double dip for the U.S. is included."

at no extra charge

It's not really a stress test unless it includes thermonuclear weapons, invasion from another planet and the rapture of all godly people before the wrath of God is unleashed.

Don't forget the contract from a large publisher - say one about seven feet tall.

OT

From the last thread. memmel left another comment after , that was informative as well. Thanks again memmel.

Rajesh wrote:

the rapture of all godly people before the wrath of God is unleashed.

When the rapture comes, we get all their stuff.

CR i agree that stress testing the banks is a good idea

and your point is well made that if nothing else, repeated stress tests should give us a comparison over time

but my criticism is that when weighing the goods

if the vendor keeps putting his heavy thumb on the scale

i dont know if im buying more or less each time i put produce in the basket

CR hit me upside the head with a 2 x 4 made outta "all the reasons im wrong"...if i am

but sure seems to me theres so much stuff hidden and marked to model that

i dont know what these tests mean?...or am i just being short sighted and obstinate?

Rob Dawg wrote:

I won't feel comfortable until the double dip is the consensus.

Of course, that won't be the case until the depression is into the main act. The opening act sure is a rollercoaster, isn't it?

CalculatedRisk wrote:

It would be better to regularly check their weight

have a tendency to keep getting fat, so continuous measurements of with the same tool, on a regular schedule seems like a very good theory, but as with all theories and measurements, there will be some degree of

Speaking of GMAC. Based on what I have heard of their mortgage ops, this is optimistic.

Watchdog: GMAC bailout could cost taxpayers $6.3B - Yahoo! News
WASHINGTON – The Treasury Department sank billions into auto finance giant GMAC Inc. without an exit strategy or proof the company was viable — a decision that could cost taxpayers $6.3 billion, a new watchdog report says.

EDIT: This is what I have been saying all along - why is GMAC, to this day, still originating residential mortgages????

"The new report says the bailout effectively saved GMAC's mortgage arm and other unprofitable businesses. It questions whether the government should have wound down GMAC's operations that are not related to auto financing, perhaps by orchestrating the same sort of bankruptcy it arranged for GM and Chrysler."

ghostfaceinvestah wrote:

The new report says the bailout effectively saved GMAC's mortgage arm and other unprofitable businesses.

Can it really ever be considered "saved" if it just keeps requiring successive bailouts?

Could the EC shoot itself in the foot?

European Commission To Back CDS Trading Ban As Second Round Of Strikes Cripples Greece; Greek GDP Now Expected To Miss Worst Case Scenario | zero hedge

What scapegoaters seem to forget is that the vast majority of existing sovereign CDS notional is tied into perfectly boring insurance "basis" trades, in which the bond is held in combination with associated CDS. Once there is an inability to have hedged cash sovereign exposure, the demand for European sovereign paper will plummet, achieving precisely the opposite of what the CDS ban is attempting to accomplish.

MLM wrote:

and all the rest

LOL!