Supervisory Capital Assessment Program: "Stress test" overview of results

[Winehole23]

http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20090507a1.pdf

Thirty-eight pages.


See Figure 2: Supervisor Estimates of Total Losses to Risk‐Weighted Assets
for More Adverse Scenario, on p.10 of the pdf.

[Winehole23]

That the SCAP is *unprecedented* -- a word it leads with twice on the first page -- may only mean that Geithner thinks himself smarter than FDR and the RTC.

Maybe he is. He may get away with a much weaker test than his predecessors.

This made me laugh:
The breadth and depth of the resources brought to bear in formulating these estimates are unparalleled.I found this risible (http://dictionary.die.net/risible) too, not so much for the irony as the obviousness:
The estimates reported here are those of the teams of supervisors, economists, and analysts that conducted this exercise, and they may or may not line up with what the firms themselves or external analysts and researchers might have produced, even using a similar set of basic assumptions.If I recall the reporting on the white paper right, the *strenuous* test administered here, the ball-busting adverse scenario, assumes the worst possible rate of unemployment would spike somewhere just north of 10 percent.

The consensus rate of unemployment today is 8.9%, but may be revised down to the 8.5-8.8% range (http://www.gallup.com/poll/118279/Unemployment-Rate-Likely-Lower-Consensus.aspx).

Also, (if I remember aright) the thorny question of valuation for *legacy assets* was solved by letting the banks apply their own price tags.

[Winehole23]

My basic feeling about this is that the longer the true financial condition of the banks and bank receivers remains hidden, the more complex and expensive the solution will be.

This so-called test is at bottom a temporizing move. Insolvent banks, for some reason, will be allowed the opportunity to muddle along for awhile, feeding at the public trough the whole way: 10 of 19 banks need more capital for foreseeable adversity.

Yet somehow, they all are *solvent* according to the SCAP. (Or at least, according to Geithner's characterization of the results on Charlie Rose).

Maybe the capped (i.e., socialized) private risk and the no-contract FDIC leverage guarantees in the PPIPs will revive the MBS/CDO corpse, and successfully transfer all the crappy risk to the public and subsidized private partners at a price that does not ruin the banks, or pauperize us.

[Marcus Bryant]

http://www.thedeal.com/dealscape/2009/05/stress_tests_report_card.php

[Winehole23]

Mr. Geithner said (http://online.wsj.com/article/SB124172137962697121.html) the Treasury Department currently has enough money left over from the original $700 billion to help the 19 banks achieve the capital buffers required by the government. He declined to say whether reopening capital assistance programs to all banks would require the administration to return to Congress to request additional funds.

[Marcus Bryant]

GMAC gets close to $20 bil when all is said and done. We hope.

[Marcus Bryant]

And the Bank of America lives up to its name. feh.

[Winehole23]

Banks lobbied for and won stress test concessions (http://www.washingtonpost.com/wp-dyn/content/article/2009/05/07/AR2009050704257_pf.html?ref=fp4).

[boutons_deux]

Several articles I read said Treasury didn't have the resources to do really thorough audit.

Even then, the banks were able to fudge/negotiate/round off down the really negative stuff.

As always, IT'S A BIG LIE from the members of the Private Financial Club That Runs America.

a fucking song and dance in front of a pile of bankrupt shit.

[Winehole23]

Several articles I read said Treasury didn't have the resources to do really thorough audit.


The breadth and depth of the resources brought to bear in formulating these estimates are unparalleled.



I agree with you, boutons. They totally fudged it.