Courtesy of Pam Martens.
The Fed’s Stress Tests Are Like the Wizard of Oz: An Illusion to Delude the Public
By Pam Martens and Russ Martens: November 16, 2016
The only thing standing between the American people and another apocalyptic financial collapse among by the biggest banks on Wall Street is the Federal Reserve’s stress tests and capital requirements. After Wall Street laid waste to the U.S. housing market and economy from 2008 through 2010, while propping itself back up with a feeding tube from the taxpayers’ pocketbook, the Obama administration passed the Dodd-Frank financial reform legislation in 2010. It wasn’t so much legislation as it was an illusory 2300 pages of rules that might someday get implemented in a meaningful way if President Obama appointed tough cops to his financial regulatory bodies – which he decidedly did not do.
One of the promises in Dodd-Frank was that the Federal Reserve would annually assess whether the biggest and most dangerous banks have adequate capital to withstand a severe recession and whether the bank has the proper risk-management programs in place to prevent it from imploding and becoming a ward of the taxpayer.
Yesterday, the nonpartisan congressional watchdog, the Government Accountability Office (GAO), became the third Federal entity in the last two years to indicate that the Fed is muffing the job of stress testing the big Wall Street banks.
The GAO report notes:
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