Poor Bank Stress Tests

                     

Examples of how foolish the periodic use of so-called Stress Tests are for evaluation of banks’ strength:

                       

1) Publicizing the results as 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.

                       

2) Very few among the public, and only a few in the financial community, fully know what each test is supposed to reflect.

                       

3) In an emergency, the amount of capital a bank has can be wiped out because of mark-to-market accounting principles that may be applied.

                       

In the past. these actions caused the very financial emergencies they supposedly were meant to avoid.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)