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Saturday, April 18, 2009

Stress Test: Debating How and What to Release

by Calculated Risk on 4/18/2009 08:51:00 AM

At least we know when: May 4th.

From Bloomberg: Bank Regulators Clash Over Endgame of U.S. Bank Stress Tests

The U.S. Treasury and financial regulators are clashing with each other over how to disclose results from the stress tests ... with some officials concerned at potential damage to weaker institutions.

With a May 4 deadline approaching, there is no set plan for how much information to release, how to categorize the results or who should make the announcements ... If all the banks pass, the tests’ credibility will be questioned, and if some banks get failing grades and are forced to accept more government capital and oversight, they may be punished by investors and customers.
A statement on the methods is scheduled for release April 24. ...

While weaker banks deemed to need additional capital will be given six months to raise it, financial markets may have little more than six minutes of patience before punishing them if the information is publicly released, one official said.
Maybe we can help Geithner and put together a list of what we think should be released ...