somebody here call it....delay, delay, delay
Repost from last thread:
OK, so why does the treasury delay releasing the results of the stress tests? Does this suggest that results are contradictory to earnings? If so, let's look at the options:
1) Earnings are bad but the stress tests are going to be a free pass? I doubt that the government would delay results if this were the case. They'd sooner juice markets.
2) Earnings are decent, but the stress tests are going to reveal some weakness and further dilution. And they don't want to put a damper on the rally prematurely.
3) Earnings are going to be bad, and the stress test results will also be bad, and they don't want to cause a panic.
4) Earnings are decent, and the stress tests are a free pass. Again, I doubt the government would delay results. They'd rather juice the markets.
It really depends on whether the stress tests are real, or an illusion to restore faith in our venerable banking institutions. And the degree to which banks have to write down their impaired assets vs. good earnings from solid refi volumes and gains from AIG.
My money is on either #2 or #3. This would also be consistent with the recent discussion of the uptick rule. It would be moot if they expected the market to recover.
Thoughts?????
Just got a virus! Only site I had open was this one!!
Did a system restore and its gone....
Crispy & Cole...saving the world one comment at a time!
More Smoke! More Mirrors! Stat!
Why don't the results of this test, if negative, trigger an 8K disclosure for those examined companies which are publicly traded?
Wow, couldn't see THAT coming....
Must be delayed because the results are so encouraging. Not.
----
"no one is pricing in low, mid teens unemployment in any of their assumptions." - Meredith Whitney
Hm... Summary results not institution-specific...
Banks starting with "G": PASS
Banks starting with "J": PASS
Banks starting with "B": see agent
Banks starting with "C": see agent
- Nemo
Why don't the results of this test, if negative, trigger an 8K disclosure for those examined companies which are publicly traded?
Results of the supervisory examination process are exempt from mandatory disclosure.
Maybe they could list them by Market Cap so we dont know who is who! 
----------------------------------------
GH i'm enamored with your mini-peak call. If this keeps going down (which i suspect might be true) you will have called it with in 15 minutes of the exact peak! Thats pretty damn good!
Cheers!
.....................
Or perhaps they are having much more trouble performing the stress tests than expected? Perhaps the banks can't value their assets and the regulators have no friggin clue how to sift through the complexities of derivatives. Thus this is just a stall tactic?
They would want to delay until after tax day, April 15. No need to jeopardize the revenue stream!
Does anyone know if any of the derivative markets have been included in the stress test? Or is that still the elephant in the room.....
I'd say there is no way GS could pass if derivatives are included. What was that stat 1200% of their capital was exposed.....
TIA
FYI: Warren also believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "...
She said she did not want to be too hard on Geithner but that he must address the issues in the report. "The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous."
Obabma and The Bushies are preposterous, we need reform today!!!
Sorry about this OT, but there is nothing left to say about the on-going corruption; it's time to act and the following link provided by Yves earlier is the change America must demand, versus the bullshit change that Obama is spitting out!
http://www.anewwayforward.org/demonstrations/
Ok, there is this great interview with Moyers and William Black.....but what more do we need America?
Face it..Americans borrowed too much, and the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known.
The swindle has sent poison into every cell of the macro socio-economic organism, and further swindles are unlikely to revive it.
The rally in stocks, the financials in particular, could go on for another month or two. In the meantime, banks are striving desperately to avoid calling in more bad loans -- especially in commercial real estate, malls, strip malls, Big Box power centers -- because they don't want any more losses on their balance sheets.
That can only go on for so long, too. Sooner or later the daisy chain of credibility in the fundamental transactions of business lose legitimacy and something's got to give.
My guess is it will first take the form, sometime after Memorial Day (but maybe sooner) of wholesale liquidations of everything under the North American sun: companies, households, chattels, US Treasury paper of all kinds, and, of course, the S & P 500.
Just one Nut Jobs observation of things to come....and soon...Remember women and children first....
Let the Rose Marie crowd rot.
Just as a reminder, the question the stress tests answer is not "pass or fail?", but "how much?"
And the answer, of course, is "Don't worry about it."
- Nemo
lets see uptick rule coming back via SEC - got to have that in place before any results of course. As the markets lift one can only scaratch their head at the "professionals" who trad them. We have turned from involuntary ignorance to willful manipulation.
No specifics? It can only mean one thing. We're doomed. We're absolutely doomed.
Where's the best place I can take my paltry life savings and spend it on drugs and prostitutes?
Time is running out.
Does this mean I can delay my tax returns too ?
What's good for the goose....
Yep, April 24th is a Friday. Put in your orders for pizza now.
Citizens Financial to cut 9,000 jobs
http://www.bizjournals.com/boston/stories/2009/04/06/daily30.html
If derivatives were included in the stress tests, there would be no way of coming up with a value of how much they need. And Nemo is correct about the answer.
I have obtained a video transcript of the results of the stress test.
Oh, and I have a feeling the additional credit line for the FDIC will be in place by the 24th.
Anybody here own Citi bonds? Bonds in any of the other banks? How are you feeling about that investment?
Full disclosure: I own some HSBC bonds, and I'm not worried.
GH - how did you find out about goldman's offering and thus stock price manipulation? Got a link?
"Let the Rose Marie crowd rot."
Are you talking about the comedienne from the Dick van Dyke show and Hollywood Squares? I am totally missing this reference.
If it was important would the stock market notice?
http://afterthecrash.net - Home of the Doomer Story Portal and Other Stuff
I'm just speculating on GS offering. They did mention that they were considering a raise to pay off TARP.
GH so without any part of the derivative market included in these tests its fair to say they are meanless? Or at least could only provide a false sense of security?
GH,
I am mindful of the quote, "Never ascribe to malice that which can be explained by incompetence" with respect to your analysis of the Treasury Dept actions...
GH - Thanks. It only makes sense...
I still wonder how the hell they are going to go from 1:30+ to 1:10 without some major writedowns....
No disclosure (national security?) and not shutting any down.
I would assume some institutions will need substantial capital. They will need to discose how much capital and to which institutions, so that is at least relative disclosure. But this whole rotten fish is stinkin' up the country.
Not funny, bro
Stress delayed is stress exacerbated.
Procrastination rarely makes a debt get smaller.
WASHINGTON (AP) - The Federal Reserve says consumer borrowing dropped in February, reversing an unexpected gain in the previous month.
The Fed says credit card use and other forms of borrowing decreased at an annual rate of $7.48 billion in February, or 3.5 percent, compared with January. Wall Street economists expected borrowing to drop by only $1 billion, according to a survey by Thomson Reuters.
The report shows consumers reluctant to ramp up spending as employers shed millions of jobs and the economy is mired in a recession.
INDIANAPOLIS (AP) - A new government subsidy that helps the unemployed keep health insurance has left recession-weary employers nervous about the financial hit they may take if more people stay covered under their plans.
Though the subsidy covers most of the premium, many employers are still worried they'll be left holding the bag on costs, according to a new survey. Especially concerned are self-insured employers, who pay medical claims themselves.
Many businesses also are shuffling through administrative hassles while they figure out who to notify and how to follow the new guidelines.
Under the new plan, part of the stimulus package passed earlier this year, people who lose their jobs but qualify to keep coverage under federal law commonly known as COBRA may be eligible for a subsidy that pays 65 percent of their premium for a few months.
The worker pays 35 percent. Then the employer covers the rest and receives reimbursement from the government through a payroll tax credit.
The help can be a welcome relief for laid-off workers.
COBRA normally requires people to pay their entire premium plus an administrative fee. That can lead to a monthly bill that can top $1,000 for family coverage, often too steep for someone who just lost a job. Studies have shown that before the subsidy only 20 percent of workers who became eligible actually paid for the coverage.
But many businesses are worried about the price they'll pay for this relief. Chicago-based Aon Consulting surveyed companies that participated in some Web seminars explaining the subsidy. More than 40 percent of the 374 that responded said they expect their health care costs to rise because of the new requirement.
nades,
My suspicion is that the derivatives are extremely sensitive to a limited number of inputs, and the magnitude of losses would be enormous if the economy deteriorates beyond current assumptions. But without transparency, who knows? Naked Capitalism has had some interesting posts about the stress tests being a joke, with insufficient manpower to really perform diligence. I have to assume that they are playing a confidence game now, as they could never cover the full extent of the losses of the unspeakable outcome. Might as well assume the best, because in the worst case there's no stopping this train.
energyecon,
I think incompetence plays a large part. But desperate men do desperate things. Hence I ascribe to malice as well. Assuming the worst possible motive has served me well up to this point. And knowing they'd love to screw me keeps me on my toes.
Keep getting upset about the stress tests-which are not what you think-or get on the EHP train and realize that even if they were honest, they couldn't afford to shutdown or clean up the balance sheets of those banks, which means the stress test cannot be a stress test. The biggest value of the stress test is that it deflects attacks away from the real bailout work (eg compare direct bailouts to the indirect Treasury/FDIC/Federal Reserve programs)
You may be winning, but you're in the wrong stadium
I'm not pessimistic, I'm not a doomer (just a gloomer), and I'm not crazy.
Of course GS will pass. You don't place operatives inside the Treasury without expecting them to deliver. It
GRAND RAPIDS, Mich. - Whirlpool Corp. said Tuesday it will cut about 5,000 jobs by the end of 2009, due in large part to the long downturn in the U.S. housing market.
The nation's largest home appliance maker also reported that its earnings fell 7 percent during the third quarter on lower global unit volumes and higher material costs. Whirlpool lowered its earnings outlook for the year and announced price increases.
Whirlpool officials received more sobering news Tuesday upon learning that consumer confidence had plunged to its lowest level on record. The Conference Board reported that its index dropped to 38 in October from 61.4 in September. That bunker mentality makes it more likely shoppers will retrench further, throwing the economy into a tailspin.
I cannot imagine under any stretch that when the banks are informed of the results of their stress test results that it doesn't trigger a supplemental 8K material report.
--Like it or not, there will be an Exurban Nation--
GH thanks! Good luck with those puts!
Rob Dawg,
it came up yesterday, they don't have to disclose anything and it's completely within existing rules
when the banks are informed
Change "when" to "if", and you have your answer.
------------------
sacrealstats
EHP and I have drawn the same conclusions.
Gavshire Hathaway:
I'm with you on the #2 or #3, although I doubt they'll EVER admit #3 unless frogs start raining from the sky. So #2 with a real soft shoe on the 'weakness', probably best to call it a softness.
Although the administration could give a few good reasons for the delay.:
- Remember.. if the banks fail the stress test.. the terrorists win.
- All institutions are 110% solvent
- "these are not the banks you are looking for.. move along.. move along.. "
- There are barely any noticeable signs of bankruptcy
.
nova (member) wrote on Tue, 04/07/2009 - 1:52pm.
If it was important would the stock market notice?
.
Backwards logic - if the stock market DOESN'T notice then it must NOT be important.
.
[/snark]
.
OT: I hope this has already been posted
U.S. asking rents off 0.6% in the first quarter. Effective rent is down 1.1% after accounting for promotions.
http://uk.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idU...
No surprise that the CPI components contradict this data. Rent of Primary Residence (NSA) went from an index level of 247.3 to 248.3 from December to February. OER (also NSA) went from an index level of 254.9 to 255.8 from December to February.
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.
There's no reason to believe any of this won't be just another craftily worded justification for plundering the public.
Bought and paid for.
So we have to wait for Treasury minutes? A newspaper getting a FOIA? A shareholder suit?
Actually, I thought this through a long time ago. Somebody is going to "pass" and they won't be able to contain the information. Once the results of one stress test becomes known it becomes a case of publish or perish. Even the worst banks won't be able to stay quiet for fear of a perception of being even worse.
--Like it or not, there will be an Exurban Nation--
.
COBRA normally requires people to pay their entire premium plus an administrative fee. That can lead to a monthly bill that can top $1,000 for family coverage, often too steep for someone who just lost a job. Studies have shown that before the subsidy only 20 percent of workers who became eligible actually paid for the coverage.
.
But many businesses are worried about the price they'll pay for this relief. Chicago-based Aon Consulting surveyed companies that participated in some Web seminars explaining the subsidy. More than 40 percent of the 374 that responded said they expect their health care costs to rise because of the new requirement.
.
If they 'like' COBRA then they will 'LOVE' single payer.
.
If for no other reason, delaying the results is a good way to ensure that if the stock market crashes because of earnings, the stress test results had nothing to do with it. There's a good chance that one of the two will be adverse, so separating them at least will spare the Treasury for getting double the blame.
"OK, so why does the treasury delay releasing the results of the stress tests? "
Reposting too, as I am without a monkey.
4) the stress tests are an excuse to look at the books and evaluate the extent of the risk that is systemic, without spooking those not in the know. There are no "results" until Timmy G, comes up with a real plan that does not result in him and Summers at the end of a rope or Bubba in cell block C on the end of them.
Dawg - The stresstest idea was never genuine or fiduciary. Either they all pass or the results will be fixed / delayed / massaged.
"A newspaper getting a FOIA??"
Couple more months and there won't be any newspapers left.
Are the bloggers who are going to inform our citizens prepared to file expensive FOIA lawsuits?
The only way we were going to get institution specific results was if all of them were going to pass... then it would be the obligatory 'nothing to see here folks, now move along' report.
.
Furthermore, if I'm correct about the magnitude of losses which will eventually come out...the outcome should be predetermined.
The results of the stress tests will be designed to maximize the payout for banks. They will result in additional taxpayer dollars being poured in, to the extent that the public will allow it without civil unrest. Hence there will be an answer to the "how much" question. And the results will be sufficiently positive so that they can convince private money to participate as well. So there must be assurances that "this really is the kitchen sink". Which will be a lie, but when you have a hole this big, you've gotta start somewhere. Maybe this could be where the positive story with earnings becomes useful?
There aren't enough government funds to solve this. So we'll need to find more suckers. It's clear that they are not going down without a fight.
Maybe the delay is to get the new short-selling restrictions in before the announcement.
Keep messing with everything you can to look useful even if you're really making things worse...
Just don't look like it and you'll be fine.
New post FWIW....
(Nemo already beat you so take your time.... 
)
Which does the current administration most closely resemble:
a) Politburo
b) Baghdad Bob
c) Bernie Madoff
"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."
If results are not institution specific, how will they justify giving some banks a lot more money than other banks?
And quit fucking around with my money!
b) Baghdad Bob
hands down!
"there are no insolvent banks (americans) in america (baghdad)"
/ducks as missiles sail over head...
That's Ballgame, Goat Herders wrote on Tue, 04/07/2009 - 3:20pm.
Are the bloggers who are going to inform our citizens prepared to file expensive FOIA lawsuits?
Sure. I imagine they'll form a press association. That's certainly my suggestion.
Couple more months and there won't be any newspapers left.
-----------------------------------------------------------------------------------------
Perhaps something a little more insidious? Happy shiny newspapers for happy shiny people. This is a newspaper of sorts isn't it? (Mr. Forbes if you read this blog-I'm missing the quote of the day , rather enjoyed that)
This Bud's for you
http://www.youtube.com/watch?v=l5zFsy9VIdM
The stated aim of the stress tests is ludicrous as Treasury already know which banks are solvent and which aren't. Continuing on with my rather non-original idea of a night of the long knives for bankers, maybe the purpose is to gather important intelligence for the replacement teams in training. If this is the real aim then not releasing the data makes sense.
"I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts." - AL
"These capitalists generally act harmoniously and in concert, to fleece the people." - AL
Maybe investor confidence will go back to 2006 levels in the next month.
Statements along the lines of "if the value of derivatives contracts were included in the test, no bank would pass" are ridiculous. In a derivative contract, there is a winner and a loser. "Derivatives" is not an asset class such as MBS, etc., and, as such, it is impossible to put a blanket value on banks' "derivatives."
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
Thats how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
Everybody knows
Leonard Cohen
From "Everybody Knows"
That'd just make the coming crash even worse (!)
The market is running on unicorns and rainbows right now, reality is going to bite like a hungry lion into a zebra's ass. There is no fundamental reason for the upswing other than a "if all all imagine REALLY hard everything will be awesome !" *sigh*
Ask not what your banker can do for you - ask for you may do for your banker.
In a derivative contract, there is a winner and a loser. "Derivatives" is not an asset class such as MBS, etc., and, as such, it is impossible to put a blanket value on banks' "derivatives."
Too bad the counter-parties for the CDS are Lehman, Bear, AIG and Iceland.
What are they waiting for? GM bankruptcy? Commercial real estate disaster? Default of sovereign countries? Ten percent unemployment? It could be any of those. I wouldn't think they are waiting for completion of the looting, because that is surely done by now. Wouldn't you think?
Federal FOIA includes possibility of agency waiver of costs for search & copying and any other agency expense incurred in responding to a FOIA request. Journalist is one of categories of those who is eligible for waiver. The FOIA also has an attorney fee-shifting provision, which means that if the plaintiff (person who requests documents/records under FOIA, request is completely or partially denied, appeals, ends up litigating denial upon appeal) meets certain criteria, the feds pay plaintiff's attorney fees. The existence of that provision means that some attorneys will take FOIA cases on a semi-contingent basis.
The person/entity filing the FOIA request might have to be prepared to provide his/her attorney w/a retainer & pay initial filing fees, etc., unless it's possible to get in forma pauperis status. In forma pauperis means the plaintiff claims he/she has insufficient income to pay all the filing fees & costs involved in litigation. An affidavit is filed stating financial status/reason unable to afford filing fees, if court finds you are sufficiently poor--a relative term in the litigation world--you are granted in forma pauperis status and do not pay filing fees/costs & fed marshals do service of your complaint, etc.
It can be more difficult than it should be to get attorney fees in a FOIA litigation. Agencies sometimes like to litigate that issue and too often courts will defer to agencies, although my experience w/FOIA cases was mostly with EPA & the Forest Service (& some time ago), might go differently w/different agencies & also depends on the circuit that hears the case.
It's not a much of a stretch to see whichever agency is performing the "stress tests" claiming an exemption from disclosure under FOIA under, umm, I think it's a proprietary information exemption, or too much information about individual banks would be disclosed (don't have the statute in front of me). That one's been used frequently to avoid disclosure of just what's in the "inert ingredients" that comprise up to 95% of herbicides, pesticides, etc., that people buy (check the label next time you go to the store), including pet flea products like Frontline, Advantage, etc.
"it came up yesterday, they don't have to disclose anything and it's completely within existing rules"
The problems here are bald-faced obvious. Everybody knows the banks have mispriced and falsely reported... and that the government will cover it up. And the government insists that trust in the banks must be restored if the economy is to recover. Clearly they government itself is at cross purposes here, preventing the very thing it says it is working to restore.
Of course, they are getting paid every day to take our money and use it to those ends.
The fact that the results are being delayed DOES look bad, I'll admit. But contrary to some here, I do believe that the stress tests were initially conceived and performed with the best of intentions: to discover how best to fix the problems at hand. I don't think the stress tests were a ruse set up to paint a rosy picture of the solvency of the banks. There are much simpler ways to tell that lie, if that's what they wanted to do (i.e., Geithner could have simply said, "We have looked at the banks' balance sheets. Everything is fine, even in a worst case economic scenario).
So I think the cause of the delay is one of the following:
1) The process is simply taking longer than planned. They don't know how exactly to value the assets.
2) The results are out, and they land somewhere between mixed and very bad. Geithner et al. need time to figure out how to disseminate this news (or cover it up).
I think a cover-up or some sort of propaganda campaign could now be in the cards. But I don't think that was the intent all along.
"...to the extent that the public will allow it without civil unrest."
So, GH, this test should not be (and will not be) performed by accountants at the bank offices. It should (will) be performed in DC by pollsters, political consultants and public opinion specialists.
Is anybody, anywhere, the least bit surprised?
"Ten percent unemployment"
That's the optimistic peak 
There's a quite unintentionally comic piece now up on DJ on a paper by three business professors analyzing last fall's short selling ban. Among others, it features this gem:
By preventing short sellers from trading, the authors argued the SEC created a bias toward higher prices, unintentionally leading to investors buying shares at prices above fundamental value.
"Unintentionally." Right. It had nothing to do with the intended purpose of the ban.
If I ever find a linked copy I'll post it.
from personal experience:
results have to be reported in standard regulatory reporting format which is often very different from how banks model their portfolios and thus the reporting part is probably taking longer than expected
the modeling part probably doesnt take that long and was supposed to be finished about a month ago, its getting everything ready for and explained to the regulators that is taking a long time...
these are giant financial institutions that do strategic planning over a two year window (my bidness school classes called this _operational_ planning) where executives use the yield curve and market expectations to do this so-called strategic planning
i left my bank job last month in disgust at the myopia and foolishness that is running rampant in my employer, gonna do something honest now
and i'll add that many results are gonna be quite worse than expected...unsecured consumer credit is gonna be fugly!
"these are giant financial institutions that do strategic planning over a two year window "
That long ? I think they work only on bonus-cycle to bonus-cycle anything past that is not worth the executive time (!)
Shill @ 11:44AM
If you want to steal from Kunstler, don't do it around people who read him.
StickyDownside
Your comments are interesting but requires a full step forward. If you are a small business owner (under 50 people) the current plan from our commander is for us to now pay 12 months of cobra versus 6 months ,if you have received a pink slip or fired. It is implied taxpayer health-care on the backs of the small business (again). Soon, small business operators will be culling (again).
sorry, a reply to dryfly.
Chant with me:
Stress delayed is stress denied!!
- Nemo