A Real Stress Test

Well you knew this was going to happen. The Treasury Department says now that they will release some of the results of the bank stress tests. 

I guess you have to give them some credit for realizing that this information would take, oh say 24 hours to leak out. What’s laughable is they think that they can control the amount of information that is disclosed. They’re still debating how much to release. As if they really control this situation.

Here, from the NYT, is how they are spinning this now:

The purpose of this program is to prevent panics, not cause them,” said one senior official involved in the stress tests who declined to speak on the record because the extent of the disclosures were still being debated. “And it’s becoming clearer that we and the banks are going to have to explain clearly where each bank falls in the spectrum.”

Two senior government officials said on Tuesday that they were now likely to encourage the banks to reveal a range of information, perhaps including the size of losses the banks could suffer under each of the stress assumptions. Critics of the testing system, however, have questioned whether the hypothetical cases are extreme enough.

“The assessments are not yet complete,” Stephanie Cutter, a spokeswoman for the Treasury, said. “When they are, we’ll work with the banks on how best to release the appropriate data and on what time frame to ensure fairness and minimize market uncertainty.”

Concern about the impact of the stress tests on the financial markets has been deep. Last week, the Federal Reserve, acting on behalf of itself and other regulators, sent e-mail messages to banks undergoing the stress tests, urging them to say nothing about the tests during the earnings season, including their capital needs or plans to return TARP money.

First, do they really think that as soon as these tests are done and some information is out that there aren’t going to be about 10 million analyses of the results floating around the Web. This is going to be about the most over analyzed set of data the planet has ever seen. If shooting themselves in the foot is their intention then they should certainly withhold some information.

Second, did you notice the last sentence from the Times article. I did not know that the Fed had told all of them not to say anything about the stress tests, capital raising or repaying TARP money. I guess Goldman missed two of the three dictates. There’s more than one way to flash the middle finger.

Just when you think things are going to get really dull they toss us a bone like this. Thanks, Ben and Tim.