John Carney wrote this yesterday about all the stress test leaks. It’s another example of why there’s little trust in the government-financial system, and why none is deserved. – Ilene
Will Anyone Investigate The Stress Test Leaks?
Courtesy of John Carney at ClusterStock
The leaks have clearly been moving markets today. Shouldn’t the banks involved be making clarifying statements to their shareholders about the accuracy of the leaks? That’s what would normally happen when unsourced news stories were having such dramatic market moving effects. It’s what happened back when the banks were complaining about ‘rumor mongers’ pushing down the prices of their shares.
It’s very likely that the banks have been told by regulators that they are not to make statements about the stress tests. But what authority do regulators have to issue this statement? Doesn’t it violate disclosure rules? Again, this looks like another case of government lawlessness, of authority exercised without legal warrant and in violation of existing standards.
Will anyone investigate these leaks? We’d guess they’re coming from the banks themselves. There’s at least the potential for serious harm to investors occurring as news spreads unevenly, first through proprietary news services such as Bloomberg and then across the wider media. It wouldn’t have been too hard for someone hooked up to a Bloomberg terminal to trade on the news before it was fully integrated into the market. Ordinary investors, of course, don’t stand a chance.
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