Bank "Stress Tests" Start Wednesday

As we noted in yesterday's posting of our events calendar for the week - Next Week's News Today - there's been a lot of talk about the nationalization of banks (see our explanation yesterday). And part of that has been in anticipation of the government checking on the health of banks receiving tax payer dollars ("stress tests"). Thus, we were not surprised to see on the front page of the New York Times this morning Edmund Andrews' story "As Doubts Grow, U.S. Will Judge Banks' Stability." We figure you saw it because it is on the front page. What you didn't see is the just released joint statement by the Treasury, FDIC, Federal Reserve, the Comptroller of the Currency, and the Office of Thrift Supervision saying the stress tests start this Wednesday, February 25.

Here's why you care: You care because the tests will indicate who is healthy, who is not and who simply needs more access to cash. That's the reason why banks are getting all the attention today both in the press, and at the White House's Fiscal Responsibility Summit. When the Treasury announced the new economic rescue plan on February 10, the stress test were part of it. The reason for the attention is whether more funds, and thus a larger stake in the banks for tax payers, is needed.