Oh oh....( #3)

[dixiegrrrrl]

Remember when the banks here did the "stress tests"??
And remember when, later, it was revealed those tests were essentially BS? ( aka: fraud).

And remember that European banks also did stress tests awhile back?

Will it surprise you to learn those test were also ....uh...BS?

"Europe's Bank Stress Tests Minimized Debt Risk

As part of the tests, 91 of Europe's largest banks were required to reveal how much government debt from European countries they held on their balance sheets. Regulators said the figures showed banks' total holdings of that debt as of March 31.
Europe's recent "stress tests" of the strength of major banks understated some lenders' holdings of potentially risky government debt, a Wall Street Journal analysis shows.

As part of the tests, 91 of Europe's largest banks were required to reveal how much government debt from European countries they held on their balance sheets. Regulators said the figures showed banks' total holdings of that debt as of March 31.

At the time, worries about banks' government-debt holdings were fanning fears about the health of Europe's banking system as a whole. Release of the bank data was considered the main benefit of the stress tests, which were widely criticised as being lenient overall.

An examination of the banks' disclosures indicates that some banks didn't provide as comprehensive a picture of their government-debt holdings as regulators claimed. Some banks excluded certain bonds, and many reduced the sums to account for "short" positions they held—facts that neither regulators nor most banks disclosed when the test results were published in late July.

Because of the limited nature of most banks' disclosures, it is impossible to gauge the number of banks that excluded portions of their sovereign portfolios from their disclosures, or the overall effect of that practice."
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http://www.efinancialnews.com/story/2010-09-07/europe-stress-test-debt-risk?mod=sectionheadlines-AM-IB

[SlipperySlope]

1. The whole exercise was crap.

The risk to the European banks is sovereign default. So they put them through a stress test that assumes their will be no sovereign default?