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Wall Street breathed a sigh of relief after Thursday’s stress-test results, but didn’t dispel the uncertainty over some of the most troubled financial giants. The stress tests—a key Obama administration effort to boost confidence in the financial system—showed nine of the 19 biggest banks have enough capital to withstand a deeper recession. Read and hear what the experts had to say…
Turning Point — or Political Theatre?
Bob Albertson of Sandler O’Neill is skeptical of the stress test’s significance and doubts the value of financial intervention in general, calling it populist “political theatre.” He said, “The government has simply repaired the damage it caused. The way they conducted the tests leaves you open to uncertainty for a long, long time.”
Fred Cannon of KBW said of Friday’s bank stock-led gain, “It’s a ‘green shoots’ rally. Whether those shoots can go to the moon or not remains to be seen.”
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After the ‘Financial Surge’
- A d v e r t i s e m e n t
A lot of these stress tests were self-examinations, said Camden Fine, president and CEO of Independent Community Bankers of America. He said investors should take the test results with “a little grain of salt.” He said the government bank intervention is a “financial surge” equivalent to the Iraq War surge, and questioned what would happen to the banks when the government eventually pulls the “surge” away.
Stress Tests: Not an ‘All-Clear’ Sign
Orin Kramer, chairman of the NJ State Investment Council called the stress test “the most comprehensive, forward-looking, transparent set of results” about banks. However, he warned that the test is not a sign for an all-clear zone and that the banks are in a rehabilitation period.
