Do you believe Secretary of Treasury Tim Geithner's explanation of what the Obama administration is trying to do with its stress tests of the nation's 19 largest banks?
He explains his attempts to save the financial system in this NY Times op-ed.
Questions:
- Is it a good assumption that businesses and consumers will want to borrow if the recession worsens?
- Is it a good assumption that if the recession worsens, businesses and consumers will be credit worthy and the kind of borrowers banks would want to lend to under any economic conditions?
- Why should we believe that Obama is trying to ensure the ability of banks to lend rather than that he is trying to ensure that he will have the power to tell banks how and when to lend and to which of his political favorites they should lend to?
- How can the dozens of supervisors who analyzed the banks' stress tests be expected to uniformly evaluate the banks?
- Why should investors, bankers or anyone else think that the stress test results haven't been skewed to punish bankers who have been outspoken about the problems they have with TARP, Paulson, Geithner and Obama?
- Given Obama's glee in demonizing bankers and Wall Street, why should we think that the administration is being fair and objective in evaluating banks and their stress tests?
- How good are the economic assumptions, scenarios and forecasts that the regulators are using, given that most economists and market analysts say they have little idea about how the economy or markets will perform over the next three, six and 24 months?
Call me disbelieving. I don't have much confidence in either the bankers or regulators, and I'm very concerned about Obama's assumption of the role of banking CEO.
Disclosure: I have a covered call trade on U.S. Bancorp (USB)
