Bank Stress Tests Leaked?

[Slew Foot]

http://turnerradionetwork.blog...tress-test-reults.html

Well, they dont show the actual results (unless I didn't see them) but the salient points they highlight are:

1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent. (Based upon the ?alternative more adverse? scenario which had a 3.3 percent contraction of the U.S. Economy in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth of the U.S. Economy but a 10.3 percent jobless in 2010.)

2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans. (Without further government injections of cash)

3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.

4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.

5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.

6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital! (HSBC is NOT in the top 19 banks undergoing a stress test, but is mentioned in the report as an aside because of its risk capital exposure to derivatives)

7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!






Do you trust these guys to have the right info? Or are they tinfoil hat wearing blowhards?

 

[Hacp]

Originally posted by: Slew Foot
http://turnerradionetwork.blog...tress-test-reults.html

Well, they dont show the actual results (unless I didn't see them) but the salient points they highlight are:

1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent. (Based upon the ?alternative more adverse? scenario which had a 3.3 percent contraction of the U.S. Economy in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth of the U.S. Economy but a 10.3 percent jobless in 2010.)

2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans. (Without further government injections of cash)

3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.

4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.

5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.

6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital! (HSBC is NOT in the top 19 banks undergoing a stress test, but is mentioned in the report as an aside because of its risk capital exposure to derivatives)

7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!






Do you trust these guys to have the right info? Or are they tinfoil hat wearing blowhards?

Don't worry. Obama has a plan. He's thinking of converting the relatively safe preferred stock we now owe to common shares that can be wiped out at any time. Theres 140 billion to be lost in this.

 

[Saga]

Amusingly, Fight Club is looking more and more a potential future reality.

 

[Jeff7]

And of course, those who took all these risks will feel very little effect from this. Screw gold, they've got multi-layered platinum parachutes. All these "risky" loans they keep talking about - the problem with them is, those taking the risks weren't really betting their own assets. Or to say it another way, they weren't doing this at any risk to themselves; they were gambling with everyone else's stuff. It's the game of "You Risk Your Life!" except "your" doesn't refer to your own life.


A guest on The Daily Show recently gave her explanation of it. She spoke of an old boom&bust cycle that the economy followed. To stop this, regulations were put in place. Slowly, the regulations were quietly unraveled, in order to divert more tasty profits back to the top. Now we're getting to watch the biggest bust in history implode on itself, while those responsible for it watch from a very safe and wealthy distance.

 

[Hacp]

Originally posted by: Jeff7
And of course, those who took all these risks will feel very little effect from this. Screw gold, they've got multi-layered platinum parachutes. All these "risky" loans they keep talking about - the problem with them is, those taking the risks weren't really betting their own assets. Or to say it another way, they weren't doing this at any risk to themselves; they were gambling with everyone else's stuff. It's the game of "You Risk Your Life!" except "your" doesn't refer to your own life.


A guest on The Daily Show recently gave her explanation of it. She spoke of an old boom&bust cycle that the economy followed. To stop this, regulations were put in place. Slowly, the regulations were quietly unraveled, in order to divert more tasty profits back to the top. Now we're getting to watch the biggest bust in history implode on itself, while those responsible for it watch from a very safe and wealthy distance.

Mainly, Fannie and Freddie.

 

[Modelworks]

I'm glad I got those Krugerrands

 

[sciwizam]

Originally posted by: Jeff7

A guest on The Daily Show recently gave her explanation of it. She spoke of an old boom&bust cycle that the economy followed. To stop this, regulations were put in place. Slowly, the regulations were quietly unraveled, in order to divert more tasty profits back to the top. Now we're getting to watch the biggest bust in history implode on itself, while those responsible for it watch from a very safe and wealthy distance.

You are referring to Elizabeth Warren, Head of the Congressional Oversight Panel, regarding TARP funds.

 

[Cattlegod]

I'll believe it when it is reported though some other source than some blog.

 

[LegendKiller]

Originally posted by: Cattlegod
I'll believe it when it is reported though some other source than some blog.

Ditto. 1800 banks going under? Sure.

 

[JS80]

Based on his getting the leaked DHS memo before the media, I'll give him 20% probably that report is real.

 

[IGBT]

Originally posted by: Saga
Amusingly, Fight Club is looking more and more a potential future reality.

ya. every neighborhood/street/24-7.

 

[IronWing]

Print more money, hand to troubled banks, wait until CDSs expire, banks saved, inflation takes off like rocket, real value of public debt drops, tax revenues increase faster than inflation due to bracketing, raise interest rates, inflation slows, problem solved, write book, go on book tour.

Of course, us savers are screwed but "we're not the problem" so we don't count.

 

[JS80]

Originally posted by: ironwing
Print more money, hand to troubled banks, wait until CDSs expire, banks saved, inflation takes off like rocket, real value of public debt drops, tax revenues increase faster than inflation due to bracketing, raise interest rates, inflation slows, problem solved, write book, go on book tour.

Of course, us savers are screwed but "we're not the problem" so we don't count.

wage earners are screwed too. you're assuming wages keep up with prices. however, i do agree with your steps to get out of debt plan.

 

[Dari]

It's coming out Friday, right? I hope we get raw data and a thorough explanation of their "stress test".

 

[Wreckem]

Originally posted by: Dari
It's coming out Friday, right? I hope we get raw data and a thorough explanation of their "stress test".

No. There methodology is released Friday. The stress tests are still being finished. Results arent expected until May 4.

 

[Udgnim]

there's a reason for the bail out money

 

[bob4432]

shit, and i didn't buy gold when i could have got it for $480/oz

 

[Genx87]

I believe the CEO of Wellsfargo and TCF wanted to give their money back partly because of this stress test. I dont know how the tarp money affects banks in this regard. But both of them basically called the stress test "assinine".

 

[Hayabusa Rider]

Originally posted by: Genx87
I believe the CEO of Wellsfargo and TCF wanted to give their money back partly because of this stress test. I dont know how the tarp money affects banks in this regard. But both of them basically called the stress test "assinine".

Well they would, wouldn't they? It appears that financial institutions have played loose and fast and as a result have become extremely fragile, like a house of cards. It reflects badly on management, and that's precisely what CEOs are.

No one is going to like what they find when light is shone in those dusty corners.

 

[Dari]

Originally posted by: Hayabusa Rider

Originally posted by: Genx87
I believe the CEO of Wellsfargo and TCF wanted to give their money back partly because of this stress test. I dont know how the tarp money affects banks in this regard. But both of them basically called the stress test "assinine".

Well they would, wouldn't they? It appears that financial institutions have played loose and fast and as a result have become extremely fragile, like a house of cards. It reflects badly on management, and that's precisely what CEOs are.

No one is going to like what they find when light is shone in those dusty corners.

Not to mention these managers probably sided with the traders when the risk management guys were against certain trades. I doubt they even had a handle on everything that was going on within the company.

 

[Fern]

So the Obama admin has announced that the results are going to be publically released.

But I've heard the Treasury (Obama admin) express fear fear that banks who needed and took TARP would be 'punished' in the stock market, new business etc, thus they 'encouraged' all big banks to take it. Same with the fear of allowing some banks to pay it back early.

Now how the h3ll does one reconcile these two completley opposite positions? WTH is going on here?

What's gonna happen to the stock price (and any new business opportunities) of banks whose 'poor' stress tests results are publicized?

Anybody else see this as irrational or inconsistent?

Fern

 

[JeffreyLebowski]

Originally posted by: bob4432
shit, and i didn't buy gold when i could have got it for $480/oz

Gold will be just as worthless as cash if the economy tanks.
There are 5 things that will have value when an economy goes down the toilet:

Guns, Ammo, Food, Water, Sex

Gold while now is percieved as a luxury, will be worthless, because it doesn't do anything. In a time where finding your next meal is the most important aspect of your day, gold is useless. you can't eat it. Bob with some extra food is going to keep his food unless he can get 1 of the above mentioned 5 items.

You can invest in gold, I'll invest in guns. Because if I have a gun and you don't, I also have what you have. If you're nice I'll just kill you, if you put up a fight, I'll make you suffer.*


*This is not directly intended or targeted at any one, it is a hypothetical situation between a survivorist and a gold horder.

 

[NaughtyGeek]

In a 250-page quarterly report to Congress, the rescue program's special inspector general concludes that a private-public partnership designed to rid financial institutions of their "toxic assets" is tilted in favor of private investors and creates "potential unfairness to the taxpayer."

"The sheer size of the program ... is so large and the leverage being provided to the private equity participants so beneficial, that the taxpayer risk is many times that of the private parties, thereby potentially skewing the economic incentives," the report states.

Source

So, private profits social losses yet again right? Nothing says that this is guaranteed to cost us, the taxpayers, money but the likelihood seems awful high. I don't know why I even get riled up any more. I guess we all just need to come to terms with the fact that the middle class is dead. Wall Street and America's financial institutions need our money more than we do.

 

[Special K]

Originally posted by: JS80

Originally posted by: ironwing
Print more money, hand to troubled banks, wait until CDSs expire, banks saved, inflation takes off like rocket, real value of public debt drops, tax revenues increase faster than inflation due to bracketing, raise interest rates, inflation slows, problem solved, write book, go on book tour.

Of course, us savers are screwed but "we're not the problem" so we don't count.

wage earners are screwed too. you're assuming wages keep up with prices. however, i do agree with your steps to get out of debt plan.

Let me ask a dumb question - if wages fail to increase with prices, then won't the inflation be cut off pretty quick? I thought the cause of inflation was too many dollars chasing too few goods and services, and that consumer spending accounts for ~70% of our economy.

If we experience a huge increase in the money supply, but the money isn't making it's way to consumers, then what would cause the inflation? Where would all this money go?

 

[eleison]

Originally posted by: JeffreyLebowski

Originally posted by: bob4432
shit, and i didn't buy gold when i could have got it for $480/oz

Gold will be just as worthless as cash if the economy tanks.
There are 5 things that will have value when an economy goes down the toilet:

Guns, Ammo, Food, Water, Sex

And according to many people, cigarettes. For me, it would also include oil and a power generator. This way, I can use it to create electricity for cooking, cleaning, and powering the 42" plasma.