Bank stress tests to cause unneeded stress?


It could be a very interesting day for banks, as the U.S. Treasury's process to provide a "comprehensive analysis of the assets on the books of 19 of the largest U.S. banks" comes under scrutiny. The details of this process are expected to be released today, and may "aggravate speculation about bank performance before the scheduled public release of the results on May 4." It is believed that this process will help identify the institutions that are at the greatest risk of failure should the economy slink further into a recession.

Critics argue that this entire process is flawed and will do little to help instill confidence in banks. Mike Holland believes that these stress tests are "at best, a waste of time," and "at worst [...] misleading and testing the wrong things." With criticism of this ilk surfacing across the Street, bank regulators are hoping to lighten concerns about the test by releasing some details today.