The long-awaited, much heralded bank “stress test” results were FINALLY released today. Turbo-tax Tim Geithner delayed them a few days, and waited until after the market close today…although much of the news was intentionally leaked before the release. Leaks claimed that the test found that Bank of America needs $33.9 billion in additional capital. The bank reportedly has the highest requirement of any of the banks that were tested.

Treasury officials also leaked the “news” that the results of the stress tests prove that no large bank is insolvent or even seriously under-capitalized! The stress tests, as predicted (and designed) have found that there is no banking crisis…all is well. Even Bank of America can “raise” the “additional” capital with the stroke of a pen by designating prior aid from the Treasury as “capital.” What a neat trick!

Here is the bank stress test report.

The Wall Street Journal says the Fed sees up to $599 Billion in bank losses. Ten firms must boost capital by $75 Billion to cope with a “Worst-Case Scenario.” Translation: Giant Black Hole caused by derivatives and ridiculous amounts of leverage, means Uncle Sam is gonna be needing some more of your money to continue it’s march towards ownership of the U.S. banking system. Obama may NOT want to be in the auto biz, but his administration is drooling over potential control of our financial system.

These stress tests fell quite short in design, execution and review. First, they were administered by the industry based on scenarios provided by the industry. Many external analysts found the “worst case scenario” to be too optimistic. Incredibly, the banks got to use their OWN risk models, the same ones that got them into trouble. There was no independent verification of the quality of the accounting.

The number of examiners per bank was less than what you’d need to probe a single department, much less an entire firm. Around 180 examiners for about eight weeks examined the 19 biggest banks. What a joke. A team of that size MIGHT be able to examine the asset quality of two or three massive banks with ordinary, old-fashioned assets. To do a meaningful stress test, you must examine thoroughly each bank’s asset quality. Any meaningful stress test would take weeks after completing the asset examination.

When the assets are financial derivatives, examination becomes incredibly complex. Evaluating counter-party risk (exposure from other financial institutions and other investors) is extremely difficult. The Treasury used a “one size fits all” stress test that grossly understated derivatives risk…which is the primary risk that the banks face.

Bottom line: there were no real examinations. Banks continue to overstate asset quality. The bankers pressured Congress, who squeezed the Financial Accounting Standards Board into gutting the rules on how the banks realize losses on their books. The banks will be taking debts and turning them into assets by converting the government’s preferred stock into common stock. Its’ all just a bunch of screwy, fuzzy math. Because there were no real examinations, there were no real stress tests. Timothy Geithner, Circus Ringmaster. Expect a lot more hot air coming from under his big tent.

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