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General News    H2'ed 3/29/14

Stress Tested: What Are They Trying To Tell Us?

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Message Danny Schechter

Many of us have seen the reports that Citibank, the biggest enchilada of finance, the bank that provided refuge to the likes of Clinton's Treasury Secretary Robert "the great deregulator" Rubin and Obama Budget director, whiz kid Peter Orzag, who has been in Court lately hiding how much he made from Citi in a divorce proceeding, is in trouble.

Citi failed the Fed's latest Stress test designed to see if it had adequate reserves to withstand the widely anticipated next financial jolt to the economy.

Washingtons Blog quotes the business news honchos at Bloomberg and then adds context:

"Citigroup Inc.'s capital plan was among five that failed Federal Reserve stress tests, while Goldman Sachs Group Inc. and Bank of America Corp. passed only after reducing their requests for buybacks and dividends.

Citigroup, as well as U.S. units of Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Banco Santander SA, failed because of qualitative concerns about their processes, the Fed said today in a statement . Zions Bancorporation was rejected as its capital fell below the minimum required. The central bank approved plans for 25 banks."

In reality, Citi " flat lined " -- went totally bust -- in 2008 .  It was insolvent .

And former FDIC chief Sheila Bair said that the whole bailout thing was really focused on bringing a very dead Citi back from the grave.

Indeed, " the big banks -- including Citi -- have repeatedly gone bankrupt."

Why didn't I read that in the news? Didn't Citi "pass" earlier tests?  I thought they were stronger than ever.

Think again, says Washington:

"So why did the U.S. government give Citi a passing grade in previous stress tests?

Because they were rigged to give all of the students an "A".

Time Magazine called then Secretary Treasury Tim Geithner a "con man" and the stress tests a "confidence game" because those tests were so inaccurate. (DS: Geither was just rewarded by the industry and named president of the private equity firm, Warburg Pincus.)

But the bigger story is that absolutely nothing was done to address the causes of the 2008 financial crisis, or to fix the system."

That's one good reason for all of us to be stressed because we can have absolutely no confidence in the stability of our economy, whatever they say about how it's all getting better.

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News Dissector Danny Schechter is blogger in chief at Mediachannel.Org He is the author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) available at Amazon.com. See Newsdisssector.org/store.htm.
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