It's indicative of the year we've had that a $75 billion deficit is a cause for celebration. That's the amount the administration said ten of the nineteen largest U.S. financial institutions need to raise in the "stress test" report released today, which contained few surprises: Bank of America is the biggest loser, requiring $33.9 billion. The leaked figure had been $34 billion, so maybe all the alleged haggling that the banks were doing with the Treasury Department over the last week netted them $100 million off the top. Martini time on K Street!
So far, everyone's acting pretty "upbeat," as the Times puts it, about the results, which Ben Bernanke said today "should provide considerable comfort to investors and the public." Still, some of the details are quite shocking — like the fact that the test projected the nineteen institutions could lose $500 billion over the next two years, or 9 percent of their loan portfolios, a percentage higher than during the Great Depression. That losses of this magnitude won't cause a depression again is evidently something for which we have our government to thank.
Here's what to look for in the immediate aftermath:
• An eminently reasonable editorial in the Times that points out flaws in the process and decries the leaks but overall praises Treasury secretary Tim Geithner for coming through in the clutch.
• A cranky Paul Krugman.
• A sunny David Brooks.
• The CNBC cheerleaders doing handstands and cartwheels and generally keeping up their battle cry that the worst is over, bring on the glorious recovery!
• Nouriel Roubini muttering that the test is nothing but marketing pablum.
• Nassim Taleb thundering that if we don't listen to him, the unexpected is sure to bite us in the ass all over again.
In other words, nothing's really changed. But that doesn't mean we can't all let ourselves be a little bit happy, for once. Here's something to get you started: