Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Results

[kpete]

Source: Bloomberg

Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Results

By Bradley Keoun and Scott Lanman

April 10 (Bloomberg) -- The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.

The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.

“If you allow banks to talk about it, people are just going to assume that the ones that don’t comment about it failed,” said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia.

Regulators are using the tests to determine whether the 19 biggest banks have enough capital to cover loan losses during the next two years if the economy shrinks, unemployment surges and housing prices keep declining. The tests are a linchpin of the plan Treasury Secretary Timothy Geithner announced in February to bolster confidence in the nation’s banks and restore financial-market stability.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aEX9sBcofMYY

[tbyg52]

1. I"m getting really tired of being kept in the dark about MY MONEY.

My retirement savings are already wrecked anyway, and I have no faith that anything being done regarding the banks is being done for the benefit of the regular people. I hope I'm wrong, but all I hear is the giant sucking sound of my pocket being picked right down to the lint.

[Lucky Luciano]

6. They said the results will be released in an orderly fashion...

ie all at the same time. This removes speculative trading based on banks that release and banks that do not.

[Igel]

11. Why?

Why assume that "in an orderly fashion" means "all at the same time."

The latter's shorter; it's not an unwieldy or obscure phrase. Granted, bureaucrats and officials speak bureaucratese officiously, but they still manage to say things clearly when they want to. I have to assume that if they had meant that they'd have said it.

My hunch is that the person who said that has absolutely no idea how or when or where they'll be released--the decision's not yet been made, and is above his pay grade--but he had to say something. Obviously he's not going to say his superiors are going to allow the info to be released in an "unorderly" or "disorderly" manner (although that might be entertaining) ... whatever he may think.

My second hunch is that they haven't gotten done beating banks over the head with the possibility of having the numbers released--power is very seductive, esp. among those who believe that they should have more of it because they're better able to manage it and wield it properly.

[tbyg52]

14. Leading to the question -

"Why are these banks' shares still being traded at all?" Or at least the big five? Why is the speculative profit making going on when the system supposedly totters on the brink?

This may well be a stupid question; I'm not an economist. But it just seems to me that the party is going on as usual for the big guys while our tax money is being vacuumed up. That's my basic take on the situation.

[Iowa]

10. Well why are you patronizing a bank?

Why aren't you doing business with a credit union instead? There's no reason for you to put up with "being kept in the dark about your money" when there are so many credit unions out there. Hell, I live in a rural area that is about as far from anywhere as it's possible to be, and I have a credit union branch office in my tiny town. You can even join credit unions online. Furthermore, there are plenty of philosophical reasons to shun banks - especially now. So why do you continue to patronize banks?

Regarding your "wrecked" retirement savings - if you're going to put your money in the financial markets, there are a few basic rules you need to follow so you don't get hammered. Rule #1: You've got to examine the history of the markets... if you don't know the downside, how can you possibly make an intelligent decision about your investments? There are some basic things you MUST know to avoid getting destroyed, and until you "get it", you should probably stick to CDs, I-Bonds, and TIPS.

Bottom line: EDUCATION. Everything you need is as close as your local library or online. And switch to a credit union! What's holding you back?

[tbyg52]

13. Assume much? Misunderstand much? Lecture much?

My IRA mutual funds are well researched, thank you, and have lost much less than the market.

Nevertheless, I do consider them wrecked, and the deregulators and the banksters to blame. I admit to having an urge to get completely out of mutual funds of any sort at what turned out to be the top of the market. I admit that I should have done so.

My IRA's are not with a bank, and I can't see anything I said that could reasonably have caused you to assume so.

The MY MONEY I was talking being kept in the dark about was my tax money, for the bailouts. Sorry if I wasn't clear. I am very unhappy about the handling of the bailout, feeling that it is much more for the benefit of the banksters than the people, and that our money is, in fact, simply being sucked upwards. I hope to be proved wrong about that, but I'm not optimistic.

My checking account, savings account, and rainy day money in CD's are in fact in a credit union, and I can't see that you had any reason to assume otherwise.

Not that any of this is any of your business, of course, except in the sense that my original post was on a public message board. My original post could have been clearer, I admit, but I still can't see that it merited your lecture.

I hate lectures, unless I'm paying a professor to give one to me.

Edited for word accidentally left in after editing a sentence.

[Demeter]

2. A Reasonable Assumption

Like a bank's going to boast about it's insolvency.

[Javaman]

8. I know, it's tragically comical.

"heyyyy, guess what we did? we lost a ass load of money on really stupid ass hair brained investments, yup, that was us, damn straight! And you can take that to the...BANK! Har har har!"

sigh.

I really wonder who is actually in charge of dealing with this mess. It reeks of Alfred E. Newman.

[tbyg52]

15. >>It reeks of Alfred E. Newman

Nah, you give them too much credit.... ;)

[rfranklin]

3. Better that we should pump in our tax dollars to save the bankers...

They work so hard screwing things up, they should get the biggest bonsuses we can't afford.

[galileoreloaded]

4. Transparency I can believe in!! n/t

[hatrack]

5. It's as though not discussing the Emperor's new clothes was enforced at gunpoint

Farcical. Does anybody really think this is going to work long-term?

[Telly Savalas]

16. No, it's not going to work long term.

Because the Treasury Dept. is going to release the results of all of the stress tests in a few weeks.

[Javaman]

7. Some truly stupid logic...

"If you allow banks to talk about it, people are just going to assume that the ones that don’t comment about it failed,”

and the very last thing they need is for bankds to talk about it and for people assume! :sarcasm:

so then release ALL the goddamn results!

fucksakes, it's like dealing with 3 year olds on crack.

[Demeter]

9. Exactly! They Are Addicts

Addicted to power, to money, to lies, to getting away with whatever they want. It's criminal. It's immoral. And evidently, it's going to be legal. Their fellow addicts are going to let them get away with it all. Just like torture. And invasion. And exporting American jobs.

[No Elephants]

12. Apologizing in advance for not knowing this, but can Congress overrule the Fed on this?