The first stress test result suggests Treasury was conning its way toward nationalization.
By Chadwick Matlin of The Big Picture
When the stress tests were first announced, I suspected that they were a convenient backdoor to nationalizing the country’s banks. The Obama administration couldn’t allow the banks to keep operating without government-supplied life jackets, safety nets, crash helmets, etc. And a piece-by-piece bailout of the banking sector was only harming the administration’s standing with the public and economists. The media’s echo chamber craves an all-or-nothing stance; start-and-stop bailouts occupy the unsatisfying middle ground. But lacking dramatic new data, the administration didn’t have the political cover it needed to seize the banks themselves. So, what to do? Create new data.
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