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  • Stress Testing: What's Your Bank's AQ? [View article]
    I agree with much of Jasper's comment, but have a different (actually, converse) criticism.
    The model relies on "efficient market" theory, which makes it hopelessly unreliable. You are assuming that investors, collectively, know the true value of these banks' assets. If that were true, we wouldn't have a problem to begin with.

    Big banks have been obfuscating their asset quality and trying to pull the wool over investors' eyes for at least a year. Some, presumably, have been more successful than others.

    Since there's no evidence yet that Treasury has done a truly thorough and honest examination, it could still be months before we really know what's going on.
    May 03 02:01 am |Rating: +8 -3 |Link to Comment
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