Saturday, April 25, 2009

Stress Test Constraint

From the New York Times:

Officials have said that at least a handful of the 19 banks undergoing the exam will need to raise sizable amounts of fresh capital, a move that will severely dilute existing shareholders. For the tests to be credible, regulators recognize that not all of the banks can pass the exam with flying colors.

So, this is not like a test with objective criteria. There will be 'several' losers. There has to be.

Hat tip to Matt Stichnoth

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