Thursday, April 30, 2009

Stress Test Incompetence

Seeing the news that the promised May 4 release of bank stress test information is going to be delayed so that the Fed (in league one suspects with the constitutional lawyer-in-chief and his team) can hold a series of debates with the wealthy lawyers representing Big Finance brought DoctoRx out of travel-preparation mode for a bit more venting and opining.

(Technically this is a Federal Reserve undertaking.  In this and most relevant bailout regards, the Fed under Ben Bernanke is as independent as a two-year old child is of Mother.)

A cardiologist, DoctoRx knows a thing or two about stress tests.  Let's just say it's his medical-legal opinion that the investing public has a right to sue all players involved for stress test-related malpractice.

Returning to the news of the day, the defeat of the mortgage cramdown bill today smells like a victory for Robert Rubin/Timothy Geithner/Larry Summers.  The administration appears not to have fought hard if at all for this bill.  Why?  EBR suspects that Mr. Obama wanted it to lose, or at least did not care much either way.  The President now wins twice.  Most important, Big Finance gets what it wants.  Second, he can pillory Big Finance because the public has no idea of his true alliances, and as well he can go after the Republicans for being the major opposition to the bill.  A great double game.  EBR thinks this view is not overly cynical:  when a President with the Congressional majority and popularity rating of Mr. Obama wants a bill passed, he gets it essentially through unless it's looney tunes.

Barack Obama may already have done as much for Big Finance in 100 days or so as George Bush did in eight years.  A crisis is, indeed,  a terrible thing to waste, and Mr. Obama is no wastrel when it comes to such matters.

Copyright (C) Long Lake LLC 2009

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