Views from across the blogosphere and elsewhere,
WSJ - Comparing the 19 banks that were tested
An interactive graphic.
NYT - The experts give their views
A round-up of opinions from bloggers, professors, consultants and investment bankers.
Dealbreaker: Live blogging the JPMorgan stress-test conference call and the Bank of America stress-test conference call
Sample: YES: Jamie Dimon just bitched out the announcer while he was reading the whole forward looking statement thing. (”Can we just skip all that and get to the call? Thanks.”)
NakedCapitalism: Yet more stress-test doubts
The unduly charitable coverage of the stress tests continues.
FT Alphaville - Paul Murphy: The faces of SCAP
“We face no problems that cannot be overcome with insight, patience, and persistence”. That’s Mr G. Phew.
SCAP - the design and implementation.
SCAP - the outright liar bit.
Nouriel Roubini on CNBC (video)
The stress tests aren’t stressful enough.
The Baseline Scenario: Has anyone figured out how to make the numbers add up?
Has anyone figured out how to make the numbers in Table 3 (PDF p. 10) in the stress test results add up?
Calculated Risk: The big question - is this enough?
The projected $600 billion in losses over the next two years under the “more adverse” scenario are in addition to the estimated $400 billion in losses and write downs are already taken by these 19 banks. Because of existing resources, future earnings, and planned transactions, the Fed estimates the banks need to raise $75 billion in capital. This is a huge question mark: Is this enough?
The Econtrarian: Accounting alchemy?
Shuffling preferred to common doesn’t really help with solvency (except with some ratios)… Congress currently is in no mood to authorize more funds to help recapitalize the financial system. The Treasury says this will not be a problem. If financial institutions need additional capital from the taxpayers to remain solvent, the Treasury will simply shift the preferred shares it already owns in financial institutions to common equity shares. Voila — capital adequate financial institutions! Really?
Felix Salmon: The stress tests’ biggest loser, GMAC
The stress test report is out, and the gory detail is all there on page 9 (which is page 10 of the PDF). The final row is the one everybody’s concentrating: the “SCAP Buffer”, or the amount of money these banks will need to raise in order to come into compliance with the stress test. By far the biggest number on that row is the $33.9 billion for BofA, but that’s just 2% of BofA’s risk-weighted assets. Check out, by contrast, the $11.5 billion that GMAC is being asked to raise: that’s a whopping 6.6% of risk-weighted assets.
The Telegraph: Armageddon’s off the table but…
What the stress tests should achieve is to take the risk of a large bank going insolvent off the table — assuming the economy doesn’t turn out worse than the tests’ worst-case scenario. But that simply means there’s less reason for banks to have to crimp lending much further than they already have.
NYT’s Floyd Norris: The losses are the thing
The numbers that are most impressive — perhaps shocking should be the word — are the estimates of possible losses from differing categories of assets…For now, the stress tests seem to have had their intended effect, of easing worries about the banking system. That will help, but in the end it will be the economy, and the actual losses, that determine how quickly the financial system recovers.
Heard on the Street: Not-so-stresssful test
The government’s bank stress tests deserve a B-minus. To give a sustained boost to investor confidence, the tests needed demonstrable rigor. They achieved that up to a point. While worst-case loss rates look tough, certain loan portfolios — in particular commercial real estate — at some banks seem to have gotten off lightly [but] the government’s earnings projections also need to be taken with a pinch of salt…
