Skip to comments.Fed to banks: Keep mum on stress test results
Posted on 04/11/2009 3:17:02 PM PDT by pleikumud
Federal regulators have told the largest U.S. banks to keep quiet about their performance on government stress tests. They fear investors could punish companies with nothing to brag about.
In letters to the 19 banks undergoing tests of their financial strength, regulators told the companies not to disclose their performance during upcoming earnings announcements, according to industry and government officials who requested anonymity because they are not authorized to discuss the process.
The order was the latest in a series of government moves designed to keep good news about strong banks from dooming others to a downward spiral of falling share prices and financial weakness. If banks receiving the highest marks trumpet their results, the fear is investors might push down share prices of those companies that make no such announcements.
Government officials want to announce the results all at once, at the end of the month.
The stress tests are a centerpiece of the Obama administration's ongoing effort to stabilize the banking industry. They subject the banks' books to a series of negative scenarios, including double-digit unemployment and further drops in home values.
The test results will help regulators determine which banks are strong enough with current subsidies, which need more money from the government or private investors, and those not worth saving.
The letters follow public statements from bank executives about the tests, including Wells Fargo & Co. Chief Executive Richard Kovacevich's calling the process "asinine." Bank of America Corp. CEO Kenneth Lewis and Citigroup Inc. CEO Vikram Pandit both have alluded to strong performance on separate, internal stress tests in recent memos seeking to build employee confidence.
(Excerpt) Read more at cnbc.com ...
So much for transparency in the financial markets.
No doubt giving the insiders plenty of "leak time" to position themselves.
With this kind of smoke and mirrors going on, anybody investing in banks now is suicidal. This mess isn't over and now the govt is playing blind man's bluff.
Wasn’t Sorbane Oxley supposed to improve financial reporting a provide more info to investors?
I’d love to see a few of the solvent banks have their own “Tea Party” and blow the cover right off of Zero’s aparatchiks.
I’m not sure you read this:
The letters follow public statements from bank executives about the tests, including Wells Fargo & Co. Chief Executive Richard Kovacevich’s calling the process “asinine.” Bank of America Corp. CEO Kenneth Lewis and Citigroup Inc. CEO Vikram Pandit both have alluded to strong performance on separate, internal stress tests in recent memos...
The banks are doing better. Many want to repay TARP money already. The change in mark-to-market accounting rules helped them a great deal. They have written off so much, they should be able to return to normal operations and show profits. Unless of course Obama’s various tax increases (rescinding Bush’s tax cuts, cap and trade taxes, etc.) further damage the economy.
The mortgage loan meltdown was caused by Congress and HUD under both Clinton and Bush II. They forced Fannie Mae, Freddie Mac, and the banks in general to lower lending standards to increase ownership among lower income groups. Once those standards were lowered, it naturally followed that standards were lowered for all borrowers, leading to zero or very little down payments, interest only, negative amortization, and so on. Hundreds of billions of bad loans were the result. There is plenty of documentation about this.
Yes but now since the socialists are in control all rules and laws are to be destroyed in order to impose more socialism.
Expect more lying, cover up, and suppressing of real facts and data to give the impression that economy is much better than what it is in reality. In fact the government is now encouraging companies to cook their books and make it appear that they are making a lot of profits when in reality many are losing money.
All this to provide a fake rally at Wall Street so the media will tell people that Obama socialism is working and the DOW is up because the economy is getting better when in reality the fundamentals of the economy are being destroyed by incredible wasteful spending and socialism. At the same time Obama will be further encouraged to impose the evil and destructive socialism upon our country.
Pfffft! Isn’t a publicly owned bank under an obligation to disclose? This is pure barnyard crap.
and has the media asked them about their transparency
nah thought not
I loathe the media for lying, for hiding facts and for twisting stories to suit their agenda
If the media had done their job in the first place then we wouldn’t have this bozo clown in the white house right now, we would’;t have had McCain either.
Hunter, tan credo etc would have had the same time as mccain
This smells to high heaven. Next thing you know they will be giving the banks a quota system that they will have to give out a certain amount of loans by the end of the month to uncredit worthy individuals thorough ACORN, mostly in Democratic controlled regions through Democrat own real estate agencies. The Democratic control banks, real estate, and politicians will get rich and the poor uncredit worthy individuals will get back into the rat race thinking the Democrats are for the working class, but all they will end up in life is paying a lot of interest to the Government controlled banks for over priced real estate, while never really earning any equity in Democratic States and cities with no jobs. But that will give them plenty of time to sit in the emergency rooms to hopefully get some one to pay attention to them because they can't get a doctors appointment in reasonable time through their supposely free government health care, which will be nothing more then a big run around for most people who end up on it.
They don’t own the banks. The banks should tell them to go to hell and release whatever they want to release. He keeps screwing with Wall Street and Banking he may find he is in way too deep. Those are some powerful people. I don’t think he wants them too mad at him. Just some advice for the poser Kenyan in chief.
Shh! Don’t knock the pie out of the sky by pointing out that pesky ‘reality’ stuff.
You wrote: “Next thing you know they will be giving the banks a quota system that they will have to give out a certain amount of loans by the end of the month to uncredit worthy individuals ...”
That’s basically what’s already happened. It’s the root cause of the mortgage meltdown. The feds told the banks they had to make high risk loans, lower their lending standards, so that low income & minorities could buy houses. It started with CRA, then expanded under Clinton and Bush. The banks were told: make these loans or we (regulators) won’t approve your applications for new branches in more affluent markets. Freddie and Fannie were told that 50% and more of their financing had to be for low income borrowers. The result, virtually all lenders lowered their standards to remain “competitive” - to get the business at high interest rates, and high risk. Hundreds of $billions were shoveled out the door. This was caused by Congress, HUD, Clinton, and Bush.
As Ronald Reagan said, government is not the solution; government is the problem.
You should start a ping list. You really do dig up some good stuff that even I don’t find on my own and I’m usually in the loop on these things. :)
If you do, please put me on it.
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