Geithner’s Stress Test “A Complete Sham”
The bank stress tests currently underway are “a complete sham,” says William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri – Kansas City. “It’s a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough.
He detailed these and related concerns in a recent interview with Naked Capitalism. But Black, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis, says the program’s failings go way beyond such technical issues. “There is no real purpose [of the stress test] other than to fool us. To make us chumps,” Black says. Noting policymakers have long stated the problem is a lack of confidence, Black says Treasury Secretary Tim Geithner is now essentially saying: “’If we lie and they believe us, all will be well.’ It’s Orwellian.”
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April 9th, 2009 at 1:52 pm
I voted for Obama with the lingering sense that he’d let me down at some point. (For the longest time, I blamed myself for being jaded or cynical.) But, I never thought he’d dash my guarded optimism so completely with his very first nominee. I get the strange sense that in a hundred years school kids will look back on the late 1900s and early 2000s just as we do the late 1800s. An era of robber barons and corrupt or spineless Presidents. No one will bother to remember the policy particulars of Reagan, Clinton, the Bushes, or Obama any more than we do Arthur, Cleveland, or McKinley. Just a bonus test question here or there. Cleveland: the first to get married in the White House. Obama: the first black President.
April 9th, 2009 at 5:52 pm
Stress Sham: Now you know why the changes to Mark to Market were ambiguous?
1. Money Centers get the Stress Test. Only one result possible. Pass. Give UAW Pension to Goldman.
2. Send Mark to Market Regulators and Auditors to the Commercial Banks — So tough on Main Street: Great for Treasuries image and Wells Fargo needs their deposits.
Interesting that those that get the $ need special rules to last long enough to get more $ till hell freezes over.
April 9th, 2009 at 5:55 pm
LOL, Romer came out and said it. Gave a little wink and a nod to the idea that it was “Like FDR” where in order to install confidence they closed the banks, and let people assume that the ones they reopened were safe.
It’s in the play book…. They said it, and have said it repeatedly….
But somehow this stuff is a surprise…..
I guess what FDR did was “Orwellian” too, I guess we will have to suffer with similar success as FDR had, Tipple the market and cut unemployment by 2/3rds… Damn Orwellians!
I still love the constant “Obama, not change I believe in”… I mean damn, I guess he isn’t superman… I’m going to let everyone in on something… He is a human, and there are no unicorns, nor Santa Clause, And statesmanship is compromise… I guess he left his magic wand in his other suit.
April 9th, 2009 at 5:58 pm
The Stress Test reminded me immediately of Colin Powell at the U.N.. See these blurry pictures of a grain bin and a truck. Well, I’ll have you know that that isn’t even real sand.. It’s a Mind F… .
I miss Paulsen. Give me big pile money so I can give it to my friends for your all good. And he did just that confusing most everybody.
Who the hell is Obama?”
April 9th, 2009 at 6:31 pm
Well, considering the circumstances, as Klugman might say: Unemployment has this “natural rate” so while let us say 12% unemployment is admittedly high, one would not refer to it as “excessive” in the classical senses due to prevailing conditions.
No schools gonna be built this time around.
Nobody is going to miss Obama.
April 9th, 2009 at 6:33 pm
I watched this guy Black on Bill Moyer’s show last week. For all his “qualifications”, he is on the outside – how do we know he knows what he is talking about?
April 9th, 2009 at 9:09 pm
dunnage obama is a fascist in training he received the largest contributions from the banks, citi fraud was the largest contributor to his inaugeration if anyone in our now communist media looked into they would have found plenty but they weren’t directed to do that obviously. obama voted for the bankruptcy bills that benefitted the banks with his own party pleading for him not too now I don’t agree with all the writers assumptions but I found this on dummies underground long before the election and everyone on there just shouted it down he will be the death of our country.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132×4827928
April 9th, 2009 at 10:07 pm
Everybody has an opinion. Let’s wait and see what comes out. They need to buy time so the banksters can take advantage of the ridiculous float to add to operating income.