Former bank regulator and S&L investigator, William Black tells Bloomberg TV that bank reserves are "grotesquely too small" to cover upcoming losses from credit card loans and that the government's "stress tests" for troubled banks are "a farce".
Black says that the so-called "stress tests" do not test bank reserves at all, because they do not test for asset quality or for losses. While citing the leaked expectation that all banks will likely pass the tests, he questions how it is that the banks could be deemed healthy while requiring $2 trillion in taxpayer bailout funds.
Related articles and posts:
1. Stress tests are "a complete sham" - Tech Ticker.
2. William Black interview on stress tests - Naked Capitalism.
3. William Black on Bill Moyers Journal - PBS.org.