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I haven't made any comments about these so-called stress tests for the banks because it was obvious (to me anyway) it was just the latest PR scam devised by Larry Summers (carried out by his puppet, Geithner) to exaggerate the financial health of the banking system.

While I was confident the results of these “tests” would be ludicrous, I wanted to hold off until they were released so I could deliver the knockout punch. In short, it's clear these "stress tests" weren't so stressful, as I had suspected.

Before examining the results, let’s begin by looking at some of the brainwashing journalism involved in this PR campaign.

From Yahoo Finance:

Last fall, the government approved $700 billion to bail out banks and embarked on a series of historic government rescues….

This is deceitful, if not an outright lie, as the total amount loaned or guaranteed to the banking system has exceeded $13 trillion. The media continues to cling onto the myth that only $700 billion has been provided to the banks because they know people will believe anything that’s repeated over and over.

The Federal Reserve's findings, released Thursday, show the financial system, like the overall economy, is healing but not yet healed.

How did this journalist come to this conclusion? This is absolute bologna. The economy has not bottomed and therefore cannot be in process of “healing.” This is just one more example of the kind of irresponsible journalism that’s led to the bankruptcy woes of several newspapers. It should be obvious that the media is serving as a big-time hack for Wall Street and the Federal Reserve.

Now let’s have a look at the results of these ever so “stressful” tests.

The results have found that 10 of the nation's 19 largest banks need a total of about $75 billion in new capital to withstand losses if the recession worsened.

The fact is that the banks are insolvent and have been for over a year as I’ve been saying. Anyone who thinks $75 billion will provide a sufficient “cushion” for a “worsening recession” has no idea what kind of trash these banks hold or how bad the economy will get. It’s certainly going to get worse than the laughable “doomsday” scenario proposed by the Federal Reserve and U.S. Treasury.

Among the 10 banks that need to raise more capital, the tests said Bank of America Corp. needs by far the most: $33.9 billion. Wells Fargo & Co. requires $13.7 billion, GMAC LLC $11.5 billion and Citigroup Inc. $5.5 billion.

I'm sorry to say, but if you believe the results of these stress tests, you’re very naïve - most likely because you've been watching too much TV and reading too much of the propaganda from print media.

Citigroup (NYSE:C) is in deep trouble, as is Bank of America (NYSE:BAC). $5.5 billion isn't going to help Citigroup one bit. In the end, I cannot see Citigroup surviving without chopping itself up further. I find it very odd how the results of its stress test were so positive. The bank is hiding an enormous amount of toxic assets and is set to implode further. And the reported $34 billion needed by Bank of America isn’t likely to solve its problems.

Wells Fargo (NYSE:WFC) isn't far behind these two. Surely you know about the incompetence of the executives running Citigroup and Bank of America. But most people don’t realize that Wells Fargo executives are member of the same club of incompetence and deceit (as is Dimon of JP Morgan (NYSE:JPM)).

When you look at some of the idiotic moves made by Wells Fargo CEO Stumpf, it should be clear he needs to be fired. As one example, he raised the dividend last year. This move boosted investor confidence during a period when there was none. But a few months later the bank reported massive loses causing the stock to collapse. This tells me he has no idea what’s going on. Wells Fargo had better get someone at the helm who knows what’s going on because the $14 billion mandated by the stress test isn’t going to help much when the onslaught of sub-primes and Alt-As expire over the next two years.

Stumpf also appears to be as trustworthy as the other banking executives. For instance, in October 2008, he gave an interview on CNBC (the “bubble network”) with Wall Street hack Maria Bartiromo, stating that Wells Fargo never did stated income, low/no document, interest only or sub-prime loans. This is a complete lie, as data indicates. In fact, Fargo was one of the biggest underwriters of sub-prime loans. Their exploitation of minorities has also been well-documented.

Yet, Bartiromo didn’t bother to challenge his false claims. After all, that simply isn’t her job as a Wall Street hack.

Ask yourself why the SEC has not charged Stumpf with securities fraud for his blatant lies and his role in this massive real estate/banking Ponzi scheme. One could raise the same question for the other banking executives. By now you should realize the SEC works for Wall Street. It’s no coincidence that the SEC chairman position is a political appointment. And since there’s really only one political part in America, regardless who is elected president, the SEC maintains its cozy relationship with Wall Street. As you might imagine, nothing changes when you only have one political party.

GMAC could be in the worst shape of all banks. I cannot see any sane investor handing money to them. Cerebrus Capital certainly isn’t in any position to help out (talk about investment morons; I smell lawsuits).

Since GMAC has no viable way to raise capital from the public markets, it looks like taxpayers will soon own more junk from the Big 3.

But don't think JP Morgan is A-Ok. They too are in trouble. It's just that they're further down in line, compliments of the Federal Reserve. To read Part 2 of this piece, click here.

Disclosure: No positions in the securities mentioned.

Source: The Stress Test Scam (Part 1)