Pardon me for asking…

But what the hell is the point of the Obama Administration placing a “stress test” on banks?  Seriously now

Top advisers to President Obama, including the Treasury secretary, Timothy F. Geithner, have insisted repeatedly that they want to keep the major banks in “private hands” and have no intention of nationalizing them. But because the tests involve nightmarish economic conditions, the results of the tests are likely to strengthen the case that some of the major banks need more capital. That would increase the likelihood that the government would increase its stake and dilute or even wipe out the shares held by private investors.

So the test is supposed to see if banks are depression-proof when, uhm, the latest economic crisis has proven that banks aren’t recession-proof.  The prospect of stress tests has Citibank dropping such a load in their pants that thy’re basically asking the government to own them:

Citigroup approached the regulators with a plan that would allow them to convert a large amount of the government’s $45 billion of preferred shares, which is treated as debt, into common stock, this person said. The government owns a stake of roughly 8 percent, but that could grow to as much as 40 percent.

There’s your stress test.  Banks get a big fat FAIL.  So why the hell are we wasting our time to find out things we already know?

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