Results of Bank 'Stress Tests' leaked...

[scorpioatl]

1) Of the top nineteen (19) banks in the nation, sixteen (16) are technically insolvent.

2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans.

3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining

Comments

[apparentparadox]

I need to get up early tomorrow morning for an early flight. Given this info, it won't be easy to sleep tonight.

This is a new business opportunity: horrible news as an alternative to an alarm clock.

[scorpioatl]

Hope you slept well anyway buddy.

[mellowtigger]

Not that I'm surprised (or particularly worried), but I had to go searching for source information.

http://www.businessinsider.com/purported-stress-test-leak-gives-market-jitters-2009-4

Sounds like it's still propaganda at this point. Unsurprising information for me (if it's true), but it's possible that ultraconservative elements are hoping to introduce a self-fulfilling prophecy by spurring a bank run. They've been at it for a while already. Maybe this "leak" is just another bullet in their terrorist arsenal. Untrue, but scary enough to make people react as if it were true.

[scorpioatl]

You're right, the validity is still in question until the official release. I doubt this would be enough to cause a large scale run on the banks though. Most people are too busy watching american idol anyway.

[mellowtigger]

Supposedly we hear public results on May 4th.
http://news.yahoo.com/s/ap/20090424/ap_on_bi_ge/us_banks_stress_tests

[kodiakva]

Thanks for posting this. I was busy doing personal stuff all day and didn't catch the business news, other than to see the stock markets tank their 3.5% to 5.5%.

Nouriel Roubini has been trumpeting this very statement -- the US banking system is insolvent -- for months. If I had half a brain I would have moved my assets by now to some other banking system, but Lord knows which one to pick over ours. Swiss is the traditional one, but with UBS' issues there, even that isn't a clearly desirable choice.

So if most of the banks don't open one morning soon, do we still get to call ourselves billionaires? ;-)

[scorpioatl]

I like what Roubini has to say; he calls it like he sees it with little or no spin on it. (excpet for promoting his book.)

I wouldn't worry much about moving paper assets right now-- everyone is in the same boat as the US.

And YES- we're all still millionaires! You noticed the profits just reported by banks last week??-- that was the result of abolishing mark to market. Now nobody knows how far under the banks truly are.

[mellowtigger]

I did not recognize "mark to market" so I looked it up online. The very bottom of the wikipedia entry talks about the 2009 April 02 rule change and how it will now obscure the valuation of assets (probably making them look more valuable on paper than they really are).