Stress Tests for Banks, Part 2

An example of how foolish are the Obama administration regulators’ periodic use of so-called Stress Test evaluations of banks’ strength:

First: Publicizing the results as they have in the past is dangerous to the economy. The term itself, is a no-no because of its psychological implications with regard to the economy and the stock market.

Secondly, little of the public and only a few in the financial community fully know what each test is supposed to reflect.

Furthermore, in an emergency, the amount of capital a bank has can be wiped out because of mark-to-market accounting principles.

In the past. these were permitted, and thus caused the very financial emergencies they supposedly were meant to avoid.