The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation’s biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.
In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.
The overall reaction to the stress tests, announced Thursday, has been generally positive. But the haggling between the government and the banks shows the sometimes-tense nature of the negotiations that occurred before the final results were made public.
I remain uncomfortable with it all. Read the whole article–KSH.
Kendall, you should. Accounting is just as subject to political pressure and games as anything else. Truth is important and is the first to be jettisened when an agenda, any agenda, is involved.
I am becoming more and more cynical (or realistic), but governments are built on lies.
Dick Kovacevich [ chair, Wells Fargo ] has called the stress tests “asinine”. “We do stress tests all the time on all our portfolios. We share them with our regulators. It is absolutely asinine that somebody would announce we’re going to do stress tests for banks and we’ll give you the answer in 12 weeks”.