As FT Alphaville has already noted here, there appears to be one very busy “person familiar with the matter” doing a not insubstantial amount of leaking to the media with regard to the stress-test results.
But just who could this person be? And what is his or her agenda?
We hereby launch the stress test leaker ‘Guess Who’ game:
1) Does he have a beard?
2) Does he work for the government?
3) Does he have blue eyes?
4) Does he work with people familiar to the matter he is familiar with?
5) Does he drive a car?
Before we digress, there is an important point to all this — who does benefit from all this leaking? Economist Paul Krugman is not so sure it’s the usual low-rank official. As he noted on Tuesday:
Traditionally, leaks to the press come from officials trying to curry favor with journalists, who will treat them favorably in the future. (See Woodward, Bob.) But that’s kind of hard to see as a motive in the case of the relevant economic officials here — possible, or maybe it’s people on the political side of the White House, but it doesn’t feel right.
Bronte Capital’s John Hempton, meanwhile, suggests the key question perhaps should be who feels empowered enough to leak so defiantly? As he opined earlier this week (our emphasis):
Leaking is a market regulation breach of the first order. Prison time. And there is the odd State Attorney General prepared to investigate. And yet the leaks seem to come thick and fast.
So are we seeing some sort of administration-approved leakage exercise? A litmus test perhaps for the real results? The emergence of a US Treasury equivalent to Pestowire? Or, as Krugman also ponders, even worse – a leakage system designed specifically to shape the results themselves?
As he concludes:
Now it seems as if the report’s contents may also be dictated by what, based on the response to leaks, the informed public is willing to swallow. (“Would you believe it if we say Citi is fine? OK, what if we say they need $5 billion? Not enough? How about 10?”)
I hope I’m not being too cynical here. But it would be nice if the administration would, just once, do something to dispel that cynicism.
Keep your guesses coming.
Related links:
Wells Fargo needs $15bn, Bloomberg says – FT Alphaville
And the results of the US bank stress test are… FT Alphaville
DIY stress test – FT Alphaville
Statement: Fed Releases More Stress Test Methodology Details – FT Alphaville
Who has the invisible (and familiar) man – John Gapper / FT (2007)