Thursday, May 07, 2009

Geithner: How We Tested the Big Banks - DealBook Blog -

A quick look from Geither's perspective at the stress tests (no not the results, just why, and what next.)

Geithner: How We Tested the Big Banks - DealBook Blog -
"We brought together bank supervisors to undertake an exceptional assessment of the strength of our nation’s 19 largest banks. The object was to estimate potential future losses, and ensure that banks had enough capital to keep lending even in the face of a deeper recession.

Some might argue that this testing was overly punitive, while others might claim it could understate the potential need for additional capital. The test designed by the Federal Reserve and the supervisors sought to strike the right balance....

The effect of this capital assessment will be to help replace uncertainty with transparency. It will provide greater clarity about the resources major banks have to absorb future losses.."

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