Eric Dash should give up reporting and get a job as a sous-chef or something. There’s just no excuse for writing thinly-sourced jibberish on B1 of the New York Times. And his editors? What were they thinking?
Dash opens his article by telling us that he has spoken to some (unnamed) bank examiners involved in conducting stress-tests on the 19 largest banks in the country and that they have good news…the books aren’t as bad as many fear. Then he tells us that many of the bailed-out banks need to be bailed out again. After that, he gives us this doozy.
Regulators say all 19 banks undergoing the exams will pass them. Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it.
Imagine a teacher grading exams and telling you that no one will fail because failing students will be allowed to get extra tutoring and retake the test. If necessary, they’ll be given the answers. But it gets worse. Read this.
Regulators recognize that for the tests to be credible, not all of the banks can be winners.
So, some banks won’t pass? But does it even matter?
But the tests, which are expected to be completed by the end of this month, are being conducted out of public view. Federal law prohibits the unauthorized disclosure of the results of any bank examination, including the stress tests.
Okay, so the bank examiners are barred by federal law from disclosing what they learn? Then what about this?
“Clearly there is a desire to put a seal of good bookkeeping on these banks,” said Lou Crandall, the chief economist at Wrightson ICAP. “Whether they will use this to select a couple of sacrificial lambs is unclear. It’s a big uncertainty hanging over the system right now.”
Sounds like they are grading PASS/FAIL and they can at least tell us if someone failed, if not any of the details about why or how badly. The same examiners that said the banks are better off than expected also say this:
Several people involved in the process say there is a wide range of results among the institutions. Those that fall short will have six months to raise capital from private investors; if they are unable to do so, the Treasury Department has said taxpayer money will be available.
Some federal and industry officials say regulators may use the results to prod reluctant banks to sell assets under that program.
A lot of people are taking this piece of crap article as a launching point to attack the administration, but the real culprit here is Eric Dash, who wrote an anonymously sourced, contradictory, piece of crap article that means nothing. He doesn’t tell us what is going on (banks are good, banks are not so good), he doesn’t tell what is going to happen (everyone will pass, some will fail), and he doesn’t tell us what we’ll learn (the law bars disclosure, some banks will be made scapegoats).
Reporting this piss-poor shouldn’t be allowed in the Paper of Record and it shouldn’t be used as a source to predict anything or criticize anyone.
Um, I think that means that the banks are doing exactly as expected, or possibly worse than expected. Did I really need to say that out loud? Holy shit.
And this:
I don’t know how to make sense of that. Are we testing these banks’ ability to “not fail” with the guarantee of taxpayer money? If so, what would be the point of that? Or are these banks “not failing” without taxpayer assistance? If so, then why do they need our assistance? Just spitballing, but it seems like a bank that needs “exceptional assistance” is a bank that will fail. It’s a headscratcher, all right.
How does anyone publish that without a “Warning: we have no idea what we’re talking about” disclaimer at the top? I need rum.
exactly. It tells us nothing. It might be the worst reporting I’ve ever seen in the NYT’s, and that included Judy Miller who at least told us what the VP wanted us to think.
Instead, as if the NYT did not have an agenda but instead was a disinterested party unconnected to Finance except by the accident of location, the Intellectuals of the Left will produce finely honed analysis on the order of “WE’VE BEEN BETRAYED!”.
you could write anything based on that article. We’ve been betrayed, the bailout is working, signs unclear…whatever.
and I have no idea what to make of that article. Also note the sources for this article were bank examiners involved in the stress-testing…and later on in the article we discover that bank examiners are breaking the law by disclosing what they saw in the stress tests. What.The.Fuck.
“It’s against the law to talk about it!!! Unless you’re going to talk about it in a good way!!!! Ponies for everyone, yaaaaay!!!!”
that’s actually not the problem. What would be illegal would be publishing the results, not merely talking about them in a general way.
I was still struck by the inanity of pointing out results of the test can’t legally be disclosed…in the middle of a fucking story about the results of the test.
I need to be drunk(er) in order to understand this.
heh. Indeed.
I am much more interested in what marcy wheeler found:
I haven’t read Marcy’s piece yet but I do wonder about those that want to learn about these results in a way that does crash the stock market. Cuz those people are fucking morans.
i think that may be bad writing on her part.
but that fact is if these banks are insolvent, better to know, and act on it, sooner rather than later. otherwise, we keep wasting money trying to bring the dead back to life.
“And then started talking about “summary results” that are “not institution-specific””
hiding it doesn’t solve anything, and just puts off the day of reckoning, and ensure that the fix will be even more costly.
Marcy has written some blind-stupid stuff recently. You are Sec. of Treasury and you realize that the entire financial system is beyond sham, that without puffing ShittyGroup would collapse, dumping 300K unemployed people into the streets and destroying every single business that relied on it for credit as well as creating major international conflict with the sovereign funds that invested plus whatever massive secondary effects there would be – SO OF COURSE YOU PULL THE PLUG because you want to destroy the economy so bad???
Naah, we just keep throwing money out of Helicopter Ben’s Printing Press at the banks until China pulls the plug on all of us.
Of course that is not what they are doing.
right, everyone know ben doesn’t actually throw the money out of a REAL helicopter.
your comment is poignant considering GM and Chrysler teeter on the brink.
But yes, i am quite happy with pulling the plug on Bank of America. If they’re insolvent, they should be nationalized, the shareholders wiped out, management replaced, and re-opened. Worked with the S&L crisis, and the longer we put off the reckoning, the more it will cost.
The S&L crisis was TINY compared to this, because we were not yet enjoying the benefits of deregulation and the concept of a $2Trillion bank like Citibank was not thinkable – and still it cost the taxpayer a fortune. The RTC was created so that we did not have to do FDIC auctions and had a more orderly process. There is, despite Krugman’s nonsense, no such process ready to work for Citi and BOA.
also, it’s extremely wrong to think of GM and Chrysler as being different problems than the banking problem. For example, Chrysler is owned by Cerberus and Cerberus is a NYC PE firm that, among other connections, had Ezra Merkin who was deeply involved in Madoff on its board. And GM’s base problem is its debt – owed to JP Morgan, Goldman Sachs etc.
“And GM’s base problem is its debt – owed to JP Morgan, Goldman Sachs etc. “
… who have gotten billions from taxpayers and are trying, in the case of JOP Morgan at least, to push Chrysler into bankruptcy, “dumping 300K unemployed people into the streets and destroying every single business that relied on it”.
so yes, pull the plug, since the collapse is going to happen anyway.
Depends on your objective. If your objective is to make major reforms in the US political and economic system from office, then probably it’s not a good idea. If your objective is to give the powers that be an excuse to shutdown any reforms at all, then sure.
what reforms are you talkiong about? the one that says “taxpayers bail out the guys who fucked the system, allowing those same crooks to keep their jobs, for no return?”
I’ll ask you them same rhetorical question booman didn’t answer. I’m a little tight on my bills, had to fix the car. can i have $500 of YOUR money to fix my car? if the car can’t run, i can’t get to work, and then my personal economy crashes, affecting a LOT of people who depend on my income. there’s a paypal link at my blog to facilitate your contribution.
if i don’t use the money to fix my car like i said i would, can i come back for another $500?
The largest public works bill in 75 years, the massive investment in energy, the reform of health, the cuttoff of many of the worst forms of corporate welfare – you know, the budget that even Krugman called a big step.
Wall Street is the engine of the economy according to MSM and Wall Street and since the ideas of the dominant class are the dominant ideas, the “left intellectuals” accept it. Meanwhile the stupid Obama administration goes on trying to delay things on the street while it invests in the mere production economy.
I don’t remember not answering that question but it isn’t the right question.
Per my example above, the S&L Crisis involved banks with $500 billion in assets and cost the taxpayer $150 billion. That’s in 1990’s era dollars. Using the same formula we would expect the nationalization of the $2.2 trillion CitiGroup to cost the taxpayer $550 billion under a similar nationalization scheme. I’m not sure if those numbers are right or off by hundred billion in either direction, but it’s probably not bad as a ballpark figure.
And when we get done with CitiGroup, we’ll still have dozens of smaller banks to clean up and possibly a couple more bohemeths like Bank of America.
Point not being that nationalization is the wrong way to go, but that bitching about how much this is costing isn’t the right frame of argument. The cost is largely the cost. Either way, the taxpayers is going to be ass-raped in a rather savage and unloving manner.
no, don’t you understand that per Marcy, and Paul Rosenberg and Paul Krugman, all we have to do is just have the FDIC take it over and poof magical pony.
well you actually did sort of answer the question: the taxpayer takes an ass-raping.
and maybe that’s one thing when the malefactors are losing their jobs and their banks.
but they’re not. call me when ken lewis and lloyd blankfein get fired.
i am not cool with socialized losses and private properties. it makes me want to go out and rob banks.
so did you just discover that socialized losses and private property is the standard operation of capitalism?
Note how many members of the Mellon and Rockefeller family hit the street after the great depression.
yes i just discovered that because i am naive and was born yesterday.
asshat.
Source: FDIC (.pdf):
A total loss to the taxpayers of $124 billion. As of May 10, 2008, CitiGroup alone was reported to have $2.2 trillion in assets.
I do wonder about those that want to learn about these results in a way that does crash the stock market. Cuz those people are fucking morans.
So true.
But I’m angry now
– Homer Simpson complaining about the waiting period for buying a gun.
And Wells Fargo feels confident enough in the bogus stress tests to jump the gun two weeks on its quarterly report announcement to magically proclaim a “$3 billion profit” for Q1.
Imagine that. The stress tests are rigged. Called this back on Monday.
Earnings are not profit.
I have no idea how they even do this accounting. $3.3 billion in write-offs, took billions in bailout money, claim earnings of 55 cents a share. Go figure.
At least it might help them raise those private equity funds when the fail the stress test – if private equity doesn’t ask the same question you just did. 🙂
Apparently the math goes something like this:
So yeah.
Ahh, there I go again missing the obvious. Again.
Well now I’m even more pissed off, how is their stock going up $4 a share.
well, they exceeded expectations and appear less likely to be liquidated.
I wouldn’t be really excited about a company that got $25 billion in stock capitalization from the government and then earned $3 billion in a quarter, but that’s just me.
don’t forget they relaxed mark-to-market rules either. Not sure, but that could have helped them in their financial statement, too.
Oh I don’t doubt that for a millisecond.
People are sick and tired of being sick and tired so they are throwing money at any good news, even manufactured stuff. They ‘said’ they would make profit, so people threw tons of money at them, making the prediction all the more likely.
Sell this rally, people. Inevitably, there are two scenarios for the next few years: inflation goes nuts or is mitigated by the relatively horrific conditions outside the US (treasuries continue to be popular, but really just extend more debt in our name).
Either way, the Piper has yet to be paid.
Isnt’ ‘sick and tired of being sick and tired’ the phrase used in AA/NA for folks in the last stages of addiction denial? At this point, one either changes fundamentally & utterly, at a systemic level, or one croaks.
ribbit, ribbit.. ribbit.
& not in a good way, neither.
An appropriate response to the author:
We should be relieved/concerned.
That about covers it.
Of the NYT and WaPo. They used to be SOMEBODY. Carried an immense amount of water for the elites in the last half of the 20th Century. A couple of times those interests even intersected with the common good(Pentagon Papers, Watergate).
Now it’s blindingly obvious to everyone but Ben Bradlee and Sally Quinn the gig is up.
Sic transit gloria mundi.
True. The piece says far more about the Times (aka The Old Grey Mare) than it does about the subject at hand.
When you stop to think of it, how can newspapers possibly maintain their standards when the only working model in an advertising revenue-free environment is pay-for-press – essentially merging journalism with marketing of products and politicians?
Further: what, in that case, are the actual standards?