U.S. Stress Tests

[MR.]

http://www.bloomberg.com/apps/news?pid=20601087&sid=al8L50CWH_Ds&refer=home

April 24 (Bloomberg) -- The Federal Reserve released the methods it used to conduct stress tests of the biggest U.S. banks, while stopping short of any details that signaled how much new capital regulators will demand.

Today’s report is part of a federal effort to restore public confidence in banks, some of which have seen their capital “substantially reduced” by the recession and financial crisis. Results from the bank tests are due for a May 4 release.

The “more adverse” scenario poses a 3.3 percent contraction in 2009 with 8.9 percent unemployment, followed by 0.5 percent growth and a 10.3 percent jobless rate in 2010.

The document, detailing stress tests assuming a decline in output of as much as 3.3 percent, is partly aimed at answering financial analysts who said the government would whitewash the banks’ weaknesses.

So we got some figures to keep an eye on.
Perhaps more so the figures for next year!

 

[Aussiejeff]

Thank heavens they decided to sweep all the *bad* stuff under the carpet. Now everyone can party on, oblivious to the *real* stress....

 

[sardines]

looks like some overdue stress testing of Bernanke's printing press

 

[Aussiejeff]

As predicted, the poor, ill-treated US Big Bwanks seem stressed about the results of the stress tests and have called for delays and omissions before releasing the report to the public.

Of course, we all know it is THEY who run the US, not the pretty Obama-san puppets!

So, predictably it looks like the real results will never be known.

"Total whitewash coming right up, SIR!!"

 

[GumbyLearner]

A friend explained to me yesterday that banks calculate bonds at the value they purchase them at. Apparently their value on US Banks balance sheets is not subject to fluctuation, regardless if they have lost value.
Does anyone know if this is true? :1zhelp:

 

[alphaman]

A friend explained to me yesterday that banks calculate bonds at the value they purchase them at. Apparently their value on US Banks balance sheets is not subject to fluctuation, regardless if they have lost value.

Sounds about right. Bonds are carried at cost if you intend to hold them until maturity. You mark to market only if you intend to trade or sell them. The same rules apply to Aussie banks.

I don't know how frequently banks are allowed to change their intentions though. That could be a funny loophole.

 

[solomon]

A friend explained to me yesterday that banks calculate bonds at the value they purchase them at. Apparently their value on US Banks balance sheets is not subject to fluctuation, regardless if they have lost value.
Does anyone know if this is true? :1zhelp:

There was an article on the silver bear cafe (blog) recently to this effect, so I'd say yep thats the way it is.

 

[Aussiejeff]

Sounds about right. Bonds are carried at cost if you intend to hold them until maturity. You mark to market only if you intend to trade or sell them. The same rules apply to Aussie banks.

I don't know how frequently banks are allowed to change their intentions though. That could be a funny loophole.

In secret backrooms all over the planet....

Gummint officials to Big Bwankers: "What loopholes would you like us to create, sirs?"

Big Bwankers: "Whatever we want, we'll let you know when we want it, ok?"

Gummint officials (at attention, saluting to Big Bwankers) chorus: "Yes, SIRS! Whatever you wish, SIRS!"

 

[MR.]

banks calculate bonds at the value they purchase them at. Apparently their value on US Banks balance sheets is not subject to fluctuation, regardless if they have lost value.

Banks bought with intentions to trade and they lost value, O'l well, MATURITY? Although interest rates have dropped so many/majority of the bonds might just be attractive to now sell!....

Unless they're bonds from some corporation which is in trouble, think we'll value them at maturity, yes me think........

CLEANER: "Dat corp' is GM, nearly don't exist now!"........

Aj's BWANKERS: "Who are you? Get out of this room.... out.......... OUT..., anyone else here which shouldn't be here?......... ok ............... What do you think guys should we put this...... um..... these bonds to a side then?" ???

------------
US Stress Tests Released on the 4/5/09, no didn't happen. Released now the 6/5/09, no still didn't happen....... Now it's the 7th, tonight. Ok, but all will be fine ofcoarse anyway That is expected isn't it? So sell on news?

 

[metric]

(while your attention was distracted by mainstream medias morality play...mr johns...)

heres some stress we dont hear about....

Federal Reserve Cannot Account for $9 Trillion

Video: Federal Reserve Cannot Account for $9 Trillion

Tuesday, May 12, 2009 12:30 PM

By: Julie Crawshaw Article Font Size


http://moneynews.newsmax.com/financenews/feds_lost_nine_trillion/2009/05/12/213463.html



The Federal Reserve apparently can't account for $9 trillion in off-balance sheet transactions.


When Rep. Alan Grayson (D-Orlando) asked Inspector General Elizabeth Coleman of the Federal Reserve some very basic questions about where the trillions of dollars that have come from the Fed's expanded balance sheet, the IG didn't know.


Worse, nobody at the Fed seems to have any idea what the losses on its $2 trillion portfolio really are.


"I am shocked to find out that nobody at the Federal Reserve is keeping track of anything," Grayson says.

 

[Aussiejeff]

(while your attention was distracted by mainstream medias morality play...mr johns...)

heres some stress we dont hear about....

Federal Reserve Cannot Account for $9 Trillion

The Federal Reserve apparently can't account for $9 trillion in off-balance sheet transactions.

When Rep. Alan Grayson (D-Orlando) asked Inspector General Elizabeth Coleman of the Federal Reserve some very basic questions about where the trillions of dollars that have come from the Fed's expanded balance sheet, the IG didn't know.

Worse, nobody at the Fed seems to have any idea what the losses on its $2 trillion portfolio really are.

"I am shocked to find out that nobody at the Federal Reserve is keeping track of anything," Grayson says.

Strewth Bruce! When are these flamin' galahs gunna pull their noggins outta their bum$ an' sniff tha ce$$pit for real?

LOL

 

[GumbyLearner]

I had to chuckle at the recent analogy used by Peter Schiff.

He said the 'stress tests' were akin to getting a bunch of gerbils to run across across a newly built bridge. Now that's funny!

I notice that Germany is now going to deploy it's new 'Bad Bank' plan.

What is a 'Bad Bank' anyway? Or should I say "Bad" Bank for want of a better adjective?

I suppose a "Bad" Bank maybe worse than a "Naughty" Bank.

I can see the comedy soon. Inspired by the one of the scenes in Life of Brian.

Is he the Saviour of the "Bad" Banks?

The supposed saviour's mother replies, "No, he's just a "Naughty" economist.

 

[metric]

BREAKING NEWS

Breaking News: Imminent Big Bank Failure on Overnight Bank Loan Failure
Stock-Markets / Credit Crisis 2009
May 13, 2009 - 10:19 AM

By: Nadeem_Walayat


Jim Willie of the Hat trick Newsletter has just sent an urgent message of a potential imminent big bank failure that would be expected to hit the financial markets hard - message as follows
http://www.marketoracle.co.uk/Article10639.html

FDIC PLANNING FOR HUGE BANK FAILURE?
By TPC. |
Late reports this evening are citing an anonymous source that says the FDIC is preparing some sort of superfund that could handle the failure of a large “systemically important financial institution.”

Reuters reports:

“Another source familiar with the FDIC’s plans said on Tuesday that the agency was considering seeking to create a new fund to help deal with any resolution of systemically important financial institutions.”

The details on this story out of Reuters are very vague so this is mostly speculation, but such a development would not be shocking to anyone familiar with the state of the U.S. banking sector. FDIC losses are quickly mounting and they are certainly ill-prepared to handle a major failure. Shoring up the FDIC is a wise insurance policy if nothing else. Or they could be preparing some U.S. banks for the same fate as Chrysler and GM.


http://pragcap.com/fdic-planning-for-huge-bank-failure

 

[Aussiejeff]

BREAKING NEWS

Waiting with baited breath....

*phew!*

Hang on a mo'...

I smell an Elephant in the room?

Or is it a smoking gun???