The Bank 'Stress Tests' Were Neither Stressful Nor Tests
So, call me crazy, but I thought after the Enron and Arthur Andersen meltdowns, the government had gotten out of the business of bending over backwards to help companies cook their books. In fact, yes after reading this Politico piece by the generally solid Eamon Javers, it seems I am crazy.
The article goes over 5 different ways the Obama administration turned the much-vaunted "stress tests" into government seals-of-approval for all sorts of accounting shenanigans. Here's an example:
December was probably an awful month for Goldman Sachs. What to do? Make it go away. The investment house changed its fiscal calendar, so that the year ended in December, rather than in November in the past. That had the effect of eliminating December's results from public disclosures...Firms took advantage of new accounting rules that can make the same business results look better on the bottom line - like the way Citigroup added an additional $2.7 billion on the bottom line simply by tweaking the math for the first quarter.
It worked. Traders started buying bank stocks again, and the White House didn't make a peep of complaint.
What's amazing is that the media and the administration even called these "stress tests" tests at all, considering "The government announced early on in the process that every single bank would "pass" the stress tests."
