Friday, May 8, 2009
Tim Geithner was interviewed by Charlie Rose yesterday.
Geithner said that the government will backstop the funds raised from private investors used to meet the cash requirements called for by the stress tests. So already, we know that the stress test procedure is not a free market procedure.
Moreover, Rose asked what would happen if a bank couldn't raise the required funds within 6 months. Geithner said that, in that case, the government would just give the funds to the bank.
So not only is the methodology for the stress tests a joke, but the procedure going forward is as well.