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Tuesday, April 14, 2009

Stress Test Results: Here comes the Sun?

by Calculated Risk on 4/14/2009 10:30:00 PM

A couple of article on revealing the stress tests results ...

From the WSJ: Banks Await Stress-Test Results

The Obama administration is considering making public some results of the stress tests being conducted on the country's 19 largest banks, said people familiar with the matter, a move that could help more clearly separate healthy banks from the weaklings.
...
It isn't clear precisely what information the government might disclose. ... But some within the administration believe a certain amount of information needs to be released in order to provide assurance about the validity and rigor of the assessments. In addition, these people also are concerned that the tests won't be able to fulfill their basic function of shoring up confidence unless investors are able to see data for themselves.
And from the NY Times: U.S. Planning to Reveal Data on Health of Top Banks
The Obama administration is drawing up plans to disclose the conditions of the 19 biggest banks in the country, according to senior administration officials ... The administration has decided to reveal some sensitive details of the stress tests now being completed after concluding that keeping many of the findings secret could send investors fleeing from financial institutions rumored to be weakest.
...
“The purpose of this program is to prevent panics, not cause them,” said one senior official ... “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.
Yes, the results have to be bank specific ... otherwise the doubts will remain.