Bank Stress Test Results are Meaningless

It looks like the fix is once again in. The results of the much ballyhooed bank stress tests will soon be released in a general way (Treasury will not be releasing the details) and guess what? Early leaks of the results are that all the banks are better off than generally thought.

However, according to an analysis by Nouriel Roubini the Department of the Treasury and the FDIC used assumptions for the macro variables in 2009 and 2010 that are so optimistic for both the baseline and more adverse scenarios that actual data for 2009 are already worse than the adverse scenario forecast for 2009 and 2010.

Roubini claims that the results of the stress test – even before they are published – are not worth the paper they are written on as they make assumptions on the economy that are much more optimistic –even in the worst scenarios that the FDIC has designed – than the actual figures for Q1 of 2009.

What is it with the special relationship between the US government and the big banks? With all of the billions handed out to the “too big to fail” banks at the expense of the taxpayers could it be that the thieves behind the banks really do call most of the shots in America?

Certainly it seems like Tim Geithner and all of Obama’s key advisers have a cozy relationship with Wall Street and the banksters that is costing the taxpayers billions. The government is socialising losses and privatizing the potential for gains for the banksters at a pace never before experienced in America.