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Obama's Bank Stress Test Data Exposes Administration's Budget Fraud

The Treasury's bank Stress Test details are out and they contain some very interesting information.....about the recently passed Obama budget. We'll get to the discussion on the banks later because right now it's much more intriguing to compare President Obama's Treasury Department assumptions with President Obama's budget assumptions.

The bank stress tests are used, in part, to anticipate if major US banks have the ability to remain in business throughout the economic downtown. The Treasury stress tests used GDP growth estimates for fiscal year 2010 ranging from .5% to 2.1% growth. Guess what GDP growth rate President Obama used to sell his budget plan last month? 3.2%. Can you say rosy scenario? Secretary Geithner apparently can't. He doesn't consider 3.2% growth in the realm of possibility when assessing the health of the nation's banks. Sounds like Geithner needs a shot of Hope and Change to get with the program. It looks like Senator Judd Gregg was right, the President's whole budget plan is a lie:

In a hearing before the Senate Budget Committee Gregg dressed down Geithner with facts, figures, and charts. While always keeping his cool, the exchange was somewhere between a mother's scolding, a drill sergeant's questioning and an attorney's cross examination.

In his opening statement, Gregg politely called the administration's budget forecast a lie.

"The argument that it cuts the debt in half in four years is, ahh, is truly spurious," he told Geithner.

President Obama himself gives Gregg's comments a sense of stinging credibility. When the president introduced Gregg as his nominee for Commerce Secretary last month, he said Gregg is known for is fiscal discipline.

"He shares my deep-seated commitment to guaranteeing that our children inherit a future they can afford," Obama said.

It's no surprise that this bank stress test data was released on a Friday afternoon. As with the body of this President's rhetoric, it puts the lie to another load of promises made by Candidate Obama. When will the legacy media begin holding this man accountable?


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Comments (13)

I like the headline current... (Below threshold)

I like the headline currently up at Yahoo:

Federal Reserve: Gov't prepared to rescue stress-tested banks

Well, that's a relief...they're ready to spring into action to increase the government's stake in our financial industry based on a test they themselves designed to determine whether or not they need to interfere more in the financial industry.

Heads they win, tails we lose.

No way! Obama's forecast w... (Below threshold)
Garandfan:

No way! Obama's forecast was optimistic? Perhaps he took a page from the California Air Resources Board when they put together their 'green forecast' for alternate energy. Every assumption they made had a rosy outcome. Every problem was trivialized. An outside agency did a scathing peer-review. Guess what? Obama wants to use ARB's plan as a national plan. Stand by to get fucked.

Hmm, so it's surprising to ... (Below threshold)
Brian:

Hmm, so it's surprising to you that when assessing a "stress test" they used more conservative estimates. I suppose that when evaluating whether our banking system has a chance of survival, you think it's always better to use more optimistic numbers, eh?

"Hmm, so it's surprising to... (Below threshold)
Bruce:

"Hmm, so it's surprising to you that when assessing a "stress test" they used more conservative estimates. I suppose that when evaluating whether our banking system has a chance of survival, you think it's always better to use more optimistic numbers, eh?"

You may have missed the point. Wouldn't it be more prudent for the BUDGET numbers to have been on the conservative side as well?

Bruce is right. It's pretty... (Below threshold)
Alex:

Bruce is right. It's pretty anti-intellectual to use unrealistically rosy estimates when crafting and promoting a federal budget.

I've got to agree with Bria... (Below threshold)

I've got to agree with Brian on this one.

Even though I would be pleasantly surprised surprised if actual GDP for 2010 was as good as the low end of the stress test, and I don't believe a thing coming from the Tax Cheat of the Treasury, I think testing worse case scenarios makes more sense.

Except of course I don't think running the stress tests has as much to do with fixing anything as creating a pretext for greater federal control.

Using 2.1% as a "stress tes... (Below threshold)
cirby:

Using 2.1% as a "stress test" isn't conservative when you're looking at a strong probability of a shrinking economy for this year - and possibly the next two or three.

Wouldn't it be more prud... (Below threshold)
Brian:

Wouldn't it be more prudent for the BUDGET numbers to have been on the conservative side as well?

One could argue that everything should be based on conservative estimates, but I doubt that's happened in the history of government. It's more reasonable to apply conservative estimates only to the things that are critical (such as the survival of the banking system), and allow "best guess" numbers for the rest. Similar to how in a household budget one might add 10% to predicted medical expenses ("just in case"), but not to leisure expenses.

I am not opining on the validity of these numbers, but only noting that it's entirely reasonable to have a range rather than a single number used across the board.

It's pretty anti-intelle... (Below threshold)
Brian:

It's pretty anti-intellectual to use unrealistically rosy estimates when crafting and promoting a federal budget.

How about when promoting a war budget?

Yes, when promoting a war b... (Below threshold)
Alex:

Yes, when promoting a war budget too, which leads straight to the obvious conclusion: Obama is just another Bush.

Does anyone know what to do... (Below threshold)
Christina Viering:

Does anyone know what to do?

The whole point of a str... (Below threshold)
Arthur:

The whole point of a stress test is to see if possibly shaky banks can surive rough economic times. Using healthy GDP predictions would be like crash testing a car at 1 mph.

Some are saying different estimates were used for the budget. We're talking about the stress test for banks here, not about the budget! Focus, people. I don't think there is much disagreement that Obama is using over-optimistic numbers for his budget forecasts.

Finally, using a lower limit of 0.5% growth doesn't seem stressy enough. That reminds me of the computer models calculating the chance of credit default swaps going bad in large numbers where the models would only accept house price forecasts that went up.

Many of the commenters here... (Below threshold)

Many of the commenters here have not read the link I provided.The stress tests use a range of assumptions, from .5% to 2.1%. Obama's budget forecast assumption of 3.2% is almost 50% higher than the most optimistic assumption in the stress test.

A variance of 15-20% might be defensible, but not 50% from the high range.




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