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Tuesday, April 07, 2009 4:52 PM


Treasury To Delay Reporting Bank Stress Test Results


Lies, coverups, distortions, and no transparency are the norm for the Treasury Department and the Fed, so it should come as no surprise that Bank Stress Test Results Delayed For Earnings.

The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury's discussions said Tuesday.

The Treasury is still talking about how results of the regulatory stress tests on the 19 largest U.S. banks will be released, and may disclose them as summary results that are not institution-specific, the source said.

The source, speaking anonymously because the Treasury has not made a final decision on what to disclose, said officials do not want any test results released before the earnings season wraps up for most U.S. banks on April 24.

The tests are designed to determine the depth of banks' capital holes if conditions deteriorate further. After the tests are completed, the banks will have six months to either raise private capital to compensate, or accept government funds.

But officials are worried about how the market will react to the stress test results if there is not a clear recovery path for a bank that is deemed to have a large capital need. The last thing Treasury wants to do is set off a panic, the source said.
It's earnings season and banks are going to pretend they are making money (or losing less than they are), and the Treasury does not want to interrupt those lies with stress test results.

Furthermore, the one thing we know for sure is the longer the Treasury delays reporting and the less detailed information the Treasury provides, the worse the actual results, regardless of what is actually reported.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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