Elizabeth Warren On Bank Stress Tests: Deja Vu All Over Again (Clip)

Head of TARP oversight, Elizabeth Warren, had a busy day yesterday with media appearances and testimony before the Joint Economic Committee of Congress.  Her panel issued it's regular monthly update on TARP developments and not too surprisingly, she softly criticized the Fed and their economic assumptions utilitzed in the loss analysis.  As most of you know, the worst-case assumptions used to evaluate the health of our banks will soon be exceeded by the worsening economy and there remain 19 months (under modeling parameters) for the reality to get even worse.

For these reasons, Warren judiciously called for the Fed to repeat the stress testing periodically (with more realistic unemployment projections and a longer time horizon) as long as toxic assets remain on the im-balance sheets of the institutions being watched.  She also criticized the continued lack of transparency surrounding the tests and suggested that the Fed and Treasury make the details of its risk model available to the public for its own evaluation (excellent suggestion, but fat chance).

“Without this information, it is not possible for anyone to replicate the tests to determine how robust they are or to vary the assumptions to see whether different projections might yield very different results,” Warren told the JEC.

She also testified that her panel would examine any and all warrant repurchase transactions for taxpayer fairness.  Another part of her testimony was more controversial.  The issue of re-using or recycling returned TARP funds for new bailouts of failure was discussed.  Though lawmakers from both sides have warned Treasury about any such recycling (and Brad Sherman even called it illegal), Warren said she believes that Geithner has legal grounds for interpretation of the language to allow for re-use of said TARP funds.

This is a very sticky issue and one that might be decided by new legislation.  Republican Congressman Jeb Hensarling of Texas has introduced a bill that would make any such recycling illegal beyond the end of this year.

Warren Link 1

Warren Link 2

Warren's CNBC appearance from Tuesday morning is after the jump.

Comments

[DailyBail]

Support Ron Paul's bill to audit the Federal Reserve.

http://action.firedoglake.com/page/s/Fed1207

[DailyBail]

Excuse Me. But WTF?

http://www.reuters.com/article/governmentFilingsNews/idUSN0938720120090609?pageNumber=1&virtualBrandChannel=0

[DailyBail]

More WTF!!?

http://finance.yahoo.com/news/Obama-Its-OK-to-borrow-to-pay-apf-15483626.html?.v=13

[DailyBail]

The Republican Party's blueprint for reform would strip the Federal Reserve of significant powers, create a single banking regulator, establish a special bankruptcy code to handle the collapse of too-big-to-fail non-banking firms and, promises "no more bailouts."

CNBC.com has obtained a copy of the plan, which is expected to be unveiled at a news conference Thursday, according to a House source.

http://www.cnbc.com/id/31192858

[Ain't Bullshittin']

Wish to HELL the Repukes would have GROWN some BALLS like that BEFORE WE WASTED 700 BILLION....and let the Fed insure an additional 4 TRILLION in alphabet soup lending facilities. If ANY REPUKES read this site....KNOW THIS.....WE HATE LIARS AND COWARDS!!!!!!!!....................Signed.........AMERICA

[gobias bluth]

This is a shell game that Geithner and Bernanke are playing. They make the banks look good because they are paying back the TARP but are the banks using the Fed's money, the taxpayer's money, or money from their supposed return to profit. I will give you a hint, Citigroup, now government owned. Elizabeth Warren is a very smart lady but she is too nice to stop the madness. She looks a little bit like Laura Linney so I may be biased. The economy is not getting better, that is a fact. Even the employment numbers are skewed by a birth and death adjustment of some sort, typical for government work. Why don't government workers look out the window in the morning? Because they would have nothing to do in the afternoon.

[gobias bluth]

I wish the libs knew the facts, debating their emotions is so tiring.