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Tuesday, January 14, 2025
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On More Bank Stress Tests

By Ilene
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On More Bank Stress Tests

bank stress test Courtesy of Kid Dynamite

Regarding the just announced 2nd round of stress tests for the banks, I have but one rhetorical question:

If a loss falls on a bank balance sheet, but no one is there to mark it to market, does it affect their capital?

-KD

ps – In case it wasn’t painfully obvious, I’m channeling my inner "If a tree falls in the forest and no one is around to hear it, does it make a sound?"

pps  – Banks are currently holding a metric crap ton of mis-marked home equity loans and second mortgages.  Unless the stress tests plan to treat these bad loans realistically, Stress Tests Part Deux will be a total farce. 

Pic credit: Jr. Deputy Accountant 

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