The government has completed its “stress” test, to determine the financial health of the nations major banks. 19 banks in total have gone through the government “stress test” Administration has already stated that they will provide bailout for these 19 banks regardless of “stress test” results, if the recession continues to worsen over the next two years. The banks have received about 214 billion in bailout money to date. Administration has stated that no banks will fail the test, but the test will determine if a particular bank needs to raise capital to survive. If they are unable to raise funds the government will step in. I think the banks should already be working on this matter without the government stress test. Regardless bailout money is there if needed. My biggest issue is that the “stress test” has been hyped up and the release of the results will only create problems. Releasing full results could undermine the banks’ health. Too little information will make investors and bank clients doubtful leading to possible decline in the markets and investor confidence. There is no good that is going to come out of the “stress test” results, and I believe it will negatively effect investor confidence in the markets. Although the confidence in the market may decline with “stress test” results, I do still believe that several of the larger banks are good Long buys, and will be even better if they give back there recent gains as a result of the “stress test” results.
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