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Futures Plunge As Fed Discloses New Stress Test: Fears US Banks Will Need To Raise Tens Of Billions In New Capital
It appears that the key news of the day was not the fluff about the IMF which as we said was total non-news, but adverse news from the Fed which just announced that it is launching its 2012 bank stess test which unlike previous iterations may actually demand capital raises from US banks. Reuters reports: "The U.S. Federal Reserve plans to stress test six large U.S. banks against a hypothetical market shock, including a deterioration of the European debt crisis. The Fed said it will publish the results next year of the tests for six banks with large trading operations. Those banks are Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo. The Fed said its global market shock test for those banks will be generally based on price and rate movements that occurred in the second half of 2008, and also on "additional stresses related to the ongoing situation in Europe." The heightened stress test for those six banks are part of a larger supervisory test the Fed will conduct on 19 firms' capital plans. The Fed's review of those plans will determine whether the banks can raise dividends or repurchase stock. The banks must submit their capital plans by Jan. 19, 2012." Incidentally, this is a clever way for the Fed to wrap up all the loose ends regarding European exposure: considering each and every day news appears about one bank or another having excess exposure to Europe, it stock punished, this may be the best comprehensive package. The problem is that next steps will certainly involve tens of billions in capital raises demanded of the above six banks (and probably Jefferies) by the Fed. Not surprisingly, ES has collapsed on the news to just over 1180.
Some more details:
- Fed asks 31 U.S. banks to project revenues, losses and capital positions through end-2013 using four scenarios.
- Two scenarios from Fed, two provided by bank
- Scenarios to start in 4Q and go through last quarter of 2014; cover benchmarks for economic activity, consumer and asset prices, financial conditions, interest rates
Stress test Q&A:
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It just went past 4:00 pm est and I liquidated all my precious and bought the global banking sector because Abby Joseph Cohen finally won me over to the bull case!
Now they tell us!
Bastards!!! They're out to ruin me!
*legitimately surprised they didn't wait until 4:10 pm Thanksgiving eve to announce this. What gives, Money Masters? Don't get sloppy on the job now, ya dig?
I guess this news is uber bullish. Where's this Buy button again?
I hope Warren 'Thanks For The Bailout Taxpayer Suckers' Buffett didn't make any bubble bath time investment decisions today nor talk with cnBSc's Becky B. Quick.
What are you talking about? These banks learned their lessons from a few years ago and are well-hedged...some would even say perfectly hedged....
I don't understand why the Fed would make waves for their wholly owned subsidiaries and partners in crime.
Those banks own the Fed, not the other way around.
I think it's more like the guys that own the Fed own enough of the banks to run them too.
The Fed is owned by the member banks.
These "stress tests" are designed not to stress the banks, but the public!
Must maintain red alert status at all time to keep the sheeple neatly karaled!
the event horizon is near......
A couple more headlines from Ben 'let me throw this sand in your eyes, bitchez, and try and kung fu your mind' Bernankincide:
11-22 16:33: Fed requires top 31 banks to submit annual capital plan 11-22 16:33: Fed will publish stress test results for 19 largest firmsIf these stress tests still don't require mark-to-market that's all you need to know that they're still stressing on more bullshit.
I just want to see CS bellyflop because I am short via the Dec 20 strike
I think a fellow ZHer may have posted the correct arithmetic in a comment way down the page; maybe trying to delay BondApocalypse 2011, aka Something Stinks in Denmark [and Austria - CreditAnstalt Redux] (in the PIIGS+France+UK trough).
There's a lot going on!
It's getting really hot in here!!
I don't understand why the Fed would make waves for their wholly owned subsidiaries and partners in crime.
in word, consolidation
Talking points. Liesman et al. have to talk about something.
These test will probably still use the fictional style of accounting so what is the point?
Talk with? Is that what the kids call it now?
Maybe they got their calendar mixed up and thought today was Wednesday.
GOT FAZ? Lovin my position....
"The Fed said it will publish the results next year of the tests for six banks with large trading operations."
Good choice. Make sure you do that AFTER the eURo system collapses and the American banking system freezes up like a puddle in the middle of winter. Yep.....that's providing some advance notice.
Exactly what I was thinking. Results to be published 6 months after it's too late.
351 days till I can pull a small IRA out of WF without the penalty. I am counting the days down. Last of the holdings in TBTF.
I thought you could transfer to another IRA, no penalties?? I would in any case transfer and take the hit, WF may not be here in 351 days... luck!
Why didn't they release this in the beginning of the day, I just put all my chips into BAC. //sarc///
Why didn't they release this in the beginning of the day, I just put all my chips into BAC. //sarc///
Nice move, Mr. Trump!
Got FAZ?
Yep, and VXX and PUTS ON EVERYTHING ANF THEIR MOMMA! :))
what was up with vxx trading the wrong way today?
Strange algo under the hood of the VXX. There is a decay factor that will cost you if you hold it too long. Also, if there is a long down trend after some volatility it can take off. Because of the decay factor I generally use it when I am sure markets going down significantly and then get the hell out. This time I saw some volatility and I expected the mature Europe problem to become common knowledge and so I bought it and FAZ and SDOW. I got in a little early but things went my way eventually. I just got out of all three. It may have been a minor mistake, but I made out ok and these days you don't want to hold anything very long. Maybe positive noise will come outa Europe cause of the IMF and maybe Christmas cheer will drive it the other way for a while. Who knows. There is some noise about consumer spending up and you know how any positive noise tends to drive the market up. Just picked up some PPHM. They had some positive news on a late stage drug trial of theirs. They've got several drugs in trials and there has been a lot of news on immune system boosting drugs to fight cancer. There was one episode on some immune system drug on Nov 16 on CBS Evening news fighting breast cancer successfully. Any way watch out on the VXX it can get you if you are forced to keep it long.
And who is dumb enough to lend these insolvent fraud factories money?
The Fed (i.e., they'll print up what they need).
by the time this test is over....um....
wont we already know the results via the market?
Pissing into the wind. That about sums up these "tests".
We already know the fundamentals... and we already know that the stress tests will not materially measure anything nor, if they did, would it be disclosed...
And no, we will not know the results by the market... it has nothing to do with anything other than what direction a unicorn fart blows.
Whoopdie fuck is all I can say....they didn't leak this one...right?
yeah what up with that? they would never hold out on us, would they?
us as in Congrus?
PS. Here it comes, Golddam sounding pensive, Mohammed the Air-abacadabara terrified and now Fed stress tests.
They gonna let the banks exclude or hold at cost their European debt?
QE whateverthefuckhowmany'shere
Too bad I just closed some of my shorts for MS expecting a ramp up any day now.
I hear you. My MS puts that I put on about 3 weeks ago have been quite friendly to me, but I'm thinking it's sold off so hard the past few weeks that it may be time to switch over to something with more downside remaining (or upside, in the case of FAZ).
I did similar move in hedging off shorts, but I think we still might get the holiday ramp. Initial reaction to news was down as should be expected, but not below lows of day. Some want better prices for the ramp, maybe.
i told you all to back up the truck on FAZ last week, BAC almost at my price target of $5.30, should be lower $4's by Xmas. WHERE IS MILLION DOLLAR DUMBASS?
Fed stress test is worse than an S&P downgrade. Ben has gone fuckin' insane.
Timmy talked him into it.
Timmy talked him into it
Nah na na na nah nah nah na na na naaaaa nah
Timmy talked him into it.
Nah na na na nah nah nah na na na naaaaa nah
Timmy talked him into it.
Nah na na na nah nah nah na na na naaaaa nah
http://www.youtube.com/watch?v=LaobXsB1fnA&feature=feedlik
This is why. Not sure who this feller is, but he points out an interesting case on the insurance not being covered in the event of fraud of MF Global. So now they are in jeopardy. Holding both a fuck tonne of derivatives with zero insurance to back to the loss.
Only thing that's keeping that market up right now is a single court case because the business doesn't move until it's out of the trustees hands. This is fucking huge. Not just one lynch pin, MF Global is the drive shaft, without them the CME backing means absolutely nothing.
Go get some pop corn...this is going to be fun.
yep, done quite well this past week trading in and out of FAZ...to scared to put an individual short on so i figured i'd stick with FAZ...
Really, more scared of going short in individual names over buying shares of FAZ?
FAZ goes gangbusters up and down.
To: Comay Mierda
I hope you realize that everything Million Dollar Dumbass says is SARCASTIC!
If BAC breaks five it's all over for them and it will be potentially nationalized. No funds will hold a stock under five normally and all things point to Doo-Doo-Frank being tested for bank bailout mechanisms.
reverse split
Let me guess...the bank's worst case scenario is the market only goes up 25% next year?
Ok I am confused.
Has the Fed always had the authority to determine dividend levels on bank stocks or is this something new?
Yes, since 1913 if they need to.
Wow.
I'll be hornswoggled.
I thought there was at least a pretense of a free market.
I suppose this is "voluntary" and only applies to banks that have an account at the Fed, (100% of banks).
oh no! we're back to noon levels. PANIC!
Let me get this straight....
The first stress tests were bullshit as since that time BAC has tanked and the big lie about "needing capital" and actual REO liabilities TO THIS DATE have yet to be publicly disclosed.
GS has been cut in half, MS is going BSC, and the regional banks are almost all single digit less than fiver whores.
Yet the FDIC reports "record" earnings this week on what? Manipulated reserves.
Stress test my ass, conduct the test with all of their bond issues trading at 55 or lower and their stocks below 5 and I might believe the results. This is more bullshit from the Fed to cover their asses AND FORCE ILLEGAL AND UNCONSTITUTIONAL mergers using their new powers delegated under Dodd-Frank.
GS-MER-BAC anyone?
How about
WFC-C-MS?
or
JPM-RF-HBAN?
This is so the 10% rule can be voided and the "system" saved to create huge megabanks to destroy the community banks and eliminate competition. Odds are by 2015 there will be fewer than 5000 banks in this country if not much, much lower.
they are just buying time until after the new year. BAC should be tips up yesterday, but now they have room for holidays (read: bonus). tick tock.
Tits. Tits up.
damn spell checker.....
Well, you could say tip up I suppose.
That's what the mohel said.
Or tits. Tits on a bull.
GS doesn't want the retail bullcrap accounts the sheeple have. They want MER's infrastructure.
Besides, you might want to read this story about JPM and what they are up to this afternoon regarding price manipulation and precious metals:
Think the Fed doesn’t act like the Mafia? Read thisThey just got a blank freaking check to move gold and silver up in Europe before most of America has a cup of coffee. Talk about the Fed spreading its tentacles....
Down in Australia (10% of the USA Population) we have 4 banks
They pretend they are separate but horzonatlly dance you as one.
The profit after tax they rape is over $1,000 per Man Woman and Baby. ($4,205 / household)
Pig men you haven't seen them to you see this ugly porker
http://www.smh.com.au/news/business/anz-banks-9m-on-new-ceo-michael-smith/2007/06/12/1181414254847.html
GoldmanMorganAmericanChaseFargoJPSachsWell™.
We'll all be banking at this place (for all your fiat needs) soon in the future.
There will be a requisite retinal/genitalia backscatter scan on the way in and an anal probe on the way out, with TSA Agents in the lobby.
TSA agents are not as invasive as the banksters...not yet at least.
I gatta say this is all wierd....the 60 min chart was looking like a nice technical bottom...then this SHTF. PPT want equities to drop..look at TLT run today. I think they are super worried this bond bubble is about to blow sky high.
How cute they're running another stress test. These guys get an F for creativity when it comes to bullshitting their solvency.
Here's a stress test question: how much can the financial institutions take from the peasants before they start hanging bankers and central bankers alike for their crimes?
So far the answer to that question is about $16 Trillion - that we KNOW of!
Where did that container of white wash go ????
We are gunna need Bigger brushes and more Cowbell for the fever
Mr Bernank..........CLOSE DOWN THESE BANKS!
Bedtime for Bernanko.
What a joke!
I concur,
They are serving, yet again, a BIG NOTHING-Burger.
And if they fail, will the feds take them over and break them? Of course not.
This is a big charade.
This "stress test" is required by 31 banks this time around compared to 19 the last time. I guess the last stress test in US and Europe just weren't stressful enough.
But, but...the first one was stressful, the second very stressful, the third very, very stressful.
You aren't just filled with confidence by now??
http://www.youtube.com/watch?v=IH8K0bPc-BE
/sarc
Sounds like it is time for the MSM whoremongers to rehash some old rumors. What will it be today?
China will bail out the EU? The Fed will bail out the EU? Catastrophe and physical destruction are good for GDP?
Round up the usual suspects...
http://www.youtube.com/watch?v=KBtzEeGjoXc
Haiti, Myanmar, North Korea & The Carpenters & Millwrights Union Pension Fund of the Ozarks have set up a EU stability fund, to be announced tommorrow.
+!
Ha! Good one. That might be worth a quick surge tomorrow...
You left out the Spats, Bustles and Buggy Whip Trade Association which has also signed up.
You haven't heard??
Tuvalu is ponying up a big chunk of the EFSF dough because their ".tv" domain has them rolling in money and they don't know what to do with it. They got all 10,000 people in the whole country (which covers about 11 sq mi.) to agree to the deal when they went to the post office to pick their mail. They get the exclusive right to broadcast the party celebrating the end of the "crisis."
We're saved.
It sure annoys me that Goldman is still listed as a bank. Sooooo, what is a bank? Oh, right, any organization that produces nothing of value and has access to 0% subsidized loans from the taxpayer so they can speculate and pay their owners massive bonus's.
I will volunteer to be a bank. I would gladly take $10 billion in interest free loans, buy $10 billion in treasury bills, and then pay off the loan a year later. It's the least I can do for my country.
Government regulation won't let you set up a bank. Not even an honest one. So you'll have to stick with the protected TBTF outfits.
Government is the problem.
What if I promise not to be an honest bank? I'll be crooked, I'll lie and cheat and steal. They like that, right?
Won't work. They have their bankers. You'll have to deliver a previously uncompromised industry into their hands. Then you're good to go.
Stress test seems like an opportunity to go private.
Have to get the confidence going again after that 'shocking' MF Global scare...
ALL YOUR ACCOUNTS, ARE BELONG TO US!
Roll out the stay puff marshmallow wonks. These banks are well capitalized. The contagion is contained. Skunk works out sniffing each others ass holes and it comes up no ones shit stinks. We the people need an audit outfit primed for skunk skinning. Paint a few bulls eyes on the stripers milking the people for every last farthing.
what is the price of silver
in farthings....
Copper, tin, or silver farthings?
There are no rumors left. The market has become a hard-skinned skeptic.
Somehow that does not jive with this:
U.S. Lenders Earned $35 Billion on Lower Loss Provisions Bloomberg
Are you trying to apply logic? Silly you.
Reducing loan loss provision....in face of continued high unemployment, massive economic uncertainty, governments being forced to cut back, etc etc. Yup, makes perfect sense. At the same time they are ramping up on sub-prime lending again.
What is that light in the tunnel I see?
Anyone notice the volume in C at 3:59 I guess a little bird got loose ad spilled the beans early. Don't worry, how could the SEC miss it.
They will be getting their real life stress test soon enough.
Blah- same old phony tests as last time.......
After Thanksgiving and the 'turkey fryer fire fears' pass I am definitely hiding my money under the mattress.
We did some stress test on our banks here in Europe. They turned out just fine...
I must concur. RBS is quite robust, and have you seen HSBC lately?
THIS is why proper regulation and adequate capital requirements, along with ensuring commercial banks weren't allowed to speculate in high beta dark pool markets, thus bringing systemic ass rapings to taxpayers, was so important.
Take a bow, regulators.
@chef /sarc
i hope the stress test isnt of the nuclear kind..........
FED is doing it to cover their ass that's all so that when the panic does happen which could be before the published resutls of the stress tests the FED can say "Look! Look! We knew this was going to happen....now shut your mouths bitchez and have some more monopoly money!!!"
Don't even know who even believes this theater anymore. Wild guess:
hint. BoA
A story told every twenty years. Strange how nobody in the media or those that write the history identify the trend.
How much (if at all) will the markets be down tomorrow ahead of no Thursday trading...and then how much will they bounce back on Friday??
...depends entirely on bond sales now which are thin...they print more capital, they force oil and gold higher further tightening the noose until a tiny fraction of a penny loses leverage it implodes so fast the HFT's start counter bidding themselves.
Look at Oil and Gold...does it look like the makers of real capital and power give a shit about petty squabbles in the peasant ranks and the puppets running their herds? Nope.
one wonders how they will evaluate the CDS triggers (or lack thereof)
just as an aside, because you know, debt and deficits really aren't all that important, or so I've heard, according to usdebtclock.org we have passed the 100% debt to GDP ratio.
just another milestone passed while traveling in the wrong direction...
Stress tests are a farce, "success" of the tests are all baked-in. Another way to juice the markets that all's well and keep the theatre going.
Dexia's prognosis was excellent, until it was found dead in the vault with a cerebral hemorage.
Will JEF be around on 1/19/12 ??
We await the verdict.
A bailout fund coming from World Of Warcraft would be more credible.
SW 1G BY FOUNTAIN UNLOCK BOXES PM
I think this test is bull shit, it is just to figure out how much the Fed will need to print. All they really need is a quick report from each banks on how much in Euro Bonds and Euro Credit Default Swaps they are exposed too.
And the real number. Banks are lying and stretching numbers and the asset values are at the time of the deal price not true value. Whatever they say figure on 40% worse.
So how's that CNBC "by banks hand over fist" advice working out? Dick X Bove, I'm looking at you.
Oy Vey Bove' is a chump.
Stress tests. Yeah, right. You can't make this shit up. Well, on second thought, the Fed and the banking cartel make up shit all the time.
Break these fucking mega-banks up already so we can play past this silly dramedy. Is there anyone left in our gov’t not on one of the countless financial services industry lobbying payrolls?
Instead of adopting a break-up solution for these monstrosities that would distribute risk across a much broader set of financial services players and put to rest this cyclonic roller coaster regulators are hell bent on riding, we’re going to perform stress tests on six under-capitalized over-leveraged mega-banks that will never disclose meaningful problems because the very regulators charged with mitigating risk fear there’s greater risk of economic meltdown if full disclosure is made.
If this were a fiction, we'd be calling it bunk because no one would believe this story line could could actually happen.
Will they mark to market at the same time?
We're not even the pawns in the big banks game of fucking with your life.
Justification for across the board "mandatory" $10 monthly checking account fees, more TARP, TALF, HAMP, QE3, increased FHA loan ceilings, Fannie/Freddie bailouts, and "patriotic" tax raises. Just wait folks, this is squeezing the tube of lube from the bottom before taking the cap off.
they are kidding me? they even call it stress test again? Their thougts must suffer Galapagos syndrome
http://www.youtube.com/watch?v=wa6O0yFv1bE
The Heapocrats and Repugnicans will try nationalization of the banks after it is far too late. Campaign 2012
Who cares about the stress tests. They have ZERO credibility.
This is how i see it going down and why!
And im probably wrong, my wife tells me I am all the time.
The Fed is gonna do qe3 so if shits falling apart it wont matter, were printing anyway. It will be the last time they print for years till all is settled. ( Thus the results of the stress tests arent needed till next year)
They wanna make sure when the shit flys next year( if it is next year the cans pushed, the banks are safe and our dollar is secure)
To many offsite information areas who are getting way to spot on with their forecasts of shit to come ( IE zero hedge etc..) thus fed is and has been watching and reading sites like this one. Not just for forecasting what people think and how angry they are at all the Bullshit printing shiester stuff going on. But triple checking facts that sites like this one puts out and trying to fix the errors pointed out to improve the system.
Just my bullshit 2 cents worth.
These are the six merchant imperialist fraudster banks that would almost certainly be toasted by Glass-Steagall.
They're just a few hundred trillion short.
Fuck 'em.
At least now though, the segragation that needs to take place, as these six are the crux of the problem (according to where they are located, from a U.S. perspective), is taking place. Obviously there are many more mercantile banks around the world. The best grouping of them worldwide is just to say the Inter-Alpha group of banksters.
Of couse, given everything else, many other banks that are not involved to moderately involved in the fraud(s) are on the brink or near it.
Glass-Steagall
Maybe the bernank, want's to use the "stress test" as a cover to print, print, print!!!
See... They need more liquidity! You go Ben!
Cue in inevitable economical failure in 5 4 3 2 1......
Since when is 8 S&P points a plunge.
Agreed. It's almost as bad as when those CNBC clowns on the Closing Bell say "we're coming off the lows of the day" when the market is...10 points off the lows.
'Super Tests'
yay
Glas-Stegall, baby... what are the GOP tools using as an excuse for not bringing this back??? Oh, and hang Blankfein to the nearest lamp pole too.
Another way to word this title is "Futures plunge on the fear that people might have to acknowledge the truth."
But of course we know that truth is never a part of any Federal Reserve stress test. So, futures will rebound.
Shouldn't the banks be able to turn around this sort of a report in a week? Do they have manual ledgers they are keeping?
It smells fishy to me.
"The U.S. Federal Reserve plans to stress test six large U.S. banks against a hypothetical market shock, including a deterioration of the European debt crisis."
The market shock is not hypothetical, and it must be coming sooner than the TBTFs have hoped. This is some sort of window dressing for some other operation that is going on.
Nope, just the efforts of many to hinder and hobble the few ignobels...Distristraction and delay are just as effective as bullets and rallies. As time runs short the 4th generation architects will panic, scattering all over the place, then the witch hunts, trials, mobs...whole shebang.
We're on the finale of the third act...Grab a beer and pull up a chair. Here have some popcorn.
So the IMF funds for two months and these "stress tests" are due in January. So whats the time line to the EU implosion? Do they really have months before it all hits the fan?
Name the major contributor of the IMF for since it's beginning?
What is the IMF used to actually do?
I knew I should have shorted more BAC shares at $7.
Stress Test Procedure:
1. Issue press release.
2. Wait for Europe to implode.
3. Measure impact on TBTF banks.
4. Implement TARP 2.
5. Wait for bonuses to be distributed.
6. Publish results.
hang on ... haven't they like done that ... already? ... like, 15 times already ... or somfing?