Word: banking
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...interesting exercise to do on a routine basis," says John Irons, research and policy director at the liberal-leaning Economic Policy Institute think tank. "I could imagine in good times that this type of stress test could remind people not to get caught up in the irrational exuberance of bank booms." (See 25 people to blame for the financial crisis...
...good times and bad, bank regulators are supposed to be probing financial firms to see if they hold adequate capital for the loans they make. And the Federal Reserve does publish data about the banks and their capital four times a year. But unless you are a bank examiner or some other industry insider, those so-called call reports are nearly impossible to read and understand...
What was different about the recent stress tests was that unlike the usual bank-by-bank examinations, the stress tests looked at all the banks as a group. By aggregating the data, the Fed presumably could make better estimates of what would be the loan losses at the individual banks. The stress tests also looked out two years, instead of the usual one, as regulators gauged if banks could weather a worsening of the economy - where the stress in the name comes from - and not just whether they had enough capital to pay for current losses. Most importantly, the results...
...Federal Reserve says the stress tests were a one-time thing and it has no plans to do them again. One problem with regularly repeating the tests is that they are expensive and time-consuming. The current one took 150 bank examiners six weeks to complete. Bert Ely, a bank-industry consultant, says bank executives don't want the stress tests to return. While Ely says he does believe the stress tests have influenced how regulators will view banks in the future, he's not sure he sees the point in them. "This is the government trying to steer business...
Eighteen months ago, when the world was awash in asset bubbles, there was perhaps no market more overheated than commodities. Prices of everything from iron ore to palm oil to corn reached dizzying heights. Crude oil nearly quintupled in five years; rice tripled in only five months. World Bank President Robert Zoellick called rising food and oil prices a "man-made catastrophe" that had the potential to quickly erase years of progress in overcoming poverty. Pundits dusted off Malthusian theories that the planet was physically unable to support the burgeoning appetites of an increasingly wealthy global population...