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Bank Stress Tests: Good News for Obama?

By Ben Pershing
Raise your hand if you understand the meaning of the bank stress tests, the results of which have been leaking out over the last few days and will be officially announced by the Obama administration this afternoon.

The Washington Post says this morning that nearly all of the tested banks "now have enough money to weather the recession" and that this is an "outcome more positive than many investors had expected." The Wall Street Journal reports that of the 19 banks tested, the Federal Reserve told seven they need to raise more money and told six others they were basically fine, while the other six results aren't known yet. Does that mean the glass is one-third full, one-third uncertain? The New York Times says the tests show "some of the nation's largest banks still need more money" (bad!) but they won't necessarily need to get it from the government (good!) unless the economy takes another turn for the worse (oh no!).

Confusing as the results have been -- particularly the way they have leaked out slowly and in sometimes contradictory fashion -- a rough consensus does seem to be emerging that on balance, the results are more positive than negative. Stocks rose accordingly on Wednesday and look primed to rise again today. All of which is good news for President Obama, who has taken his share of criticism for his handling of the government's sundry bailout programs since taking office. Americans' confidence in the state of the economy keeps ticking up, and if the White House can keep that trendline heading in the right direction while not asking Congress for any more bank bailout money, the administration will consider this arduous exercise a victory.

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Posted at 8:30 AM ET on May 7, 2009  | Category:  The Rundown
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