Banks get passing grades -- at least in how they spun the stress tests
As evidence, see how the Asian markets did ahead of this morning's opening bell on Wall Street. As the Dow wire notes:
Maybe the banks didn't play the government like a fiddle. As I noted Tuesday, "the Fed, the banks, and the White House are all gaming the public about this issue of whether the banks need more money to weather the recession." These "tests" — in which the banks got to self-report results with cheat sheets in hand instead of being audited, examined, or even proctored — could have been just a shrewd move by the Obama crew to not only make the banks scramble for outside money but also pump optimism — even if it's false optimism — into the markets.
If that's the case? Smart move by the Obama crew, at least in the short run. If the apparently good overall results merely mask a worse situation for the banks, then for the long run? Watch out.
Now, if the government merely got gamed by the banks in this process, the long run also looks bleaker. At this point, everyone's guessing as if they were onlookers at a craps game — which they are.
The notion that the banks have been spinning this "stress-test" bullshit all week long is not something that just occurred to people this morning. (Even I noted it in "Spinning out of control on the banks' stress tests" and "The Bart Simpson Effect: Banks change that "F" to an "A.") But today's Washington Post has a nice take on the gamesmanship — relying on the premise that the banks were gaming the government. In "Major Banks Negotiate, Spin, Chafe at Stress-Test Results," a trio of reporters writes:
If it does turn out, however, that Bank of America — which is in bad enough shape that it simply had to flunk itself — has to be nationalized, at least it won't have to change its name.