Monday, April 20, 2009

But our financial institutions are in better shape….

LEAKED! Bank Stress Test Reults !

lending has decreased by 23% since TARP.. and some other nuggets.

Posted by techieman @ 02:27 PM (1029 views)
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9 thoughts on “But our financial institutions are in better shape….

  • Thanks for this techie – the latest from our side of the pond is according to today’s moneymarketing – “Building societies play down Bank SLS ‘crisis’ talks Lee Jones – 20-Apr-2009”

    The building societies involved in this weekend’s reports suggesting the Moody’s downgrade has forced talks with the Bank of England have played down any rumours of a “crisis”.
    Weekend reports in several of the national newspapers reported that some of the recently downgraded building societies have faced a weekend of “crisis talks” with the Bank of England with regard their involvement with the Special Liquidity Scheme.
    Several mutuals, including Chelsea, Yorkshire, Skipton and Norwich & Peterborough were reported to have met with Bank officials to discuss possible breaches to SLS terms.

    The SLS demands AAA covered bonds, which are entered into the scheme in return for gilts, but since last week’s downgrade by Moody’s some of the mutuals’ lodged bonds are now in breach of requirements.

    Chelsea has confirmed that it has been talking to the bank. It could not comment on the specific details being discussed, but says there is no crisis.

    A spokeswoman says: “As a result of the downgrade we have had to discuss with the Bank of England the impact on our eligibility for the SLS. This might mean administrative changes, it might mean alternative plans with the Bank, we are just talking through all the options.”

    Skipton says: “We are working with Moody’s to ensure the structure of our programme ensures we maintain the highest rating. As a matter of good practice we are keeping the Bank of England informed.”

    An N&P spokeswoman says the closest the building society has come to “crisis talks” is a letter to the Bank of England. She says: “We have sent one correspondence to the Bank, discussing various options which could include paying back our covered bond or even just amending the terms.”

    She says N&P will continue to look for long-term cheap funding regardless of the downgrade, which may include entering into the Treasury’s Credit Guarantee Scheme.

    Yorkshire denied it has been in any talks with the Bank, contrary to the reports.

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  • little professor says:

    The Treasury Department has not yet received the results of “stress tests” on the health of the nation’s 19 top banks, spokesman Andrew Williams said on Monday, after a blog said it had obtained the test results.

    Williams made the comments after banks added to losses before the market open following a “free speech” blog, called the Turner Radio Network, said 16 of the 19 are “technically insolvent.” The post cited what it said was a U.S. government report.

    “There is no basis for that report, we do not even have results yet,” Williams said.

    _____

    This “leaked” report is unlikely to exist except in the blog author’s imagination. Everyone knows the real stress test has had its parameters set so that the banks will pass with flying colours – it’s a fiddle.

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  • dohousescrashinthewoods says:

    If there is any truth to it (and I’m not noticing a strong track-record of truth from the US government) then this is damning.

    In the meantime, if people are willing to believe this, it shows what people think is plausible.

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  • dohousescrashinthewoods says:

    LP, are you saying that this could in fact be true, but will not come out because the “exam” has been fiddled?

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  • little professor says:

    No. The stress test was set like today’s A-level exams – ridiculously easy to pass. It’s purely a PR exercise, so the government can say they have put the banks through their paces and they are all sound (whereas in fact everyone knows both Citi and Bank of America are insolvent.) The abrogation of mark to market requirements a few weeks ago allows these zombie banks to pretend they are still alive, while the government pours money into them and sticks the stress test stamp of approval on them to justify it.

    No bank will fail the stress test. Mark my words.

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  • LP there is a link to the bloomberg reporting of this on the turner page. I think its actually a bit of a bob quick – someone has done the test and the results have come out. What happens now though is probably as you say – i.e. a positive spin will be put on – or the results will be down-played or even ridiculed – i mean what would be the result oterwise… a run leading to the FDIC having to bail out depositors ….. and it running out of money?? Interesting nonetheless.

    Jack – yea read a bit about the Chelsea – seems Abramavich is not the only one suffering in West London! Watch this space methinks.

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  • dohousescrashinthewoods says:

    I had a look at the Bloomberg page too and it was closely but not quite related.

    Seemed to be talking a bit more about what to publish when the results do come out – if all the banks pass it looks like a whitewash, if any of them fail, it’s a death-knell – and if they publish nothing, the conspiracists will have a field-day. They’ve rather painted themselves into a corner.

    Good word, by the way, LP – abrogation.

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  • little professor says:

    7. dohousescrashinthewoods

    I did have to look it up to check that it meant what I thought it meant :p

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  • dohousescrashinthewoods says:

    That’s ok, I had to look it up to see what it meant. It’s nice to have a few extra syllables before bed-time.

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