“Too big to fail” evidently means “too big to fail a stress test,” too. Although the results of the recently conducted stress tests on the nineteen largest U.S. banks won’t be made public until May 4, the advance word on Friday, April 24 was a Whole Lotta Rosie. From the NYT:
‘On Friday, the Federal Reserve reported that the banks whose books it had analyzed recently had enough capital to offset a raft of new losses, . . .’
So everybody’s solvent! And those toxic assets are both nutritious and delicious! I bet my students would love it if I could get Tim Geithner or the Fed to write my final exams — nobody would be allowed to fail.
‘. . . reinforcing the belief that the government would support the largest banks even if their financial health eroded, and buoying the stock market.’
Um, didn’t the government already do that, to the tune of $700 billion, not counting the Fed’s waves of loan/subsidies? But of course those subsidies came with some conditions, from the understandable ($500,000 pay cap) to the asinine (don’t hire no foreigners), so the big banks are naturally eager to pay back those loans and return to looting. As long as they can still count on a fresh round of bailouts when their losses become too gaping to hide, they’re in a perfect position. The old mantra of “privatize the profits, socialize the losses” doesn’t quite convey the apparent duplicity at work here. It leaves out the “fabricate the profits” and “hide the losses” steps.