The results are meaningless, which is why the market loves them.
By Nancy Miller of The Big Money
The stress tests on the country’s biggest banks sparked a new round of confidence in the sector, enabling the banks to raise tens of billions in cash without government support. The test results—whether you liked the test itself or not—felt like an endorsement that those little green shoots of economic recovery were real. Yet the relationship between the stress test and the economy is tenuous; just because the patient is no longer in the intensive care unit doesn’t mean that bank officers will be back at their desks anytime soon handing out loans like it’s 2005.
