Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Results

So basically this is what the Fed is saying:

Let's just keep it our dirty, little secret that your bank is technically insolvent at this time. We would not want investors to make wise investment decisions and sell their stock and preserve their capital, that could make the bank's stock price fall.

The public is so in the dark when it comes to what is really happening in the banking system and the economy or where the billions of dollars of bailout money is going.-Lou

Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Results

April 10 (Bloomberg) -- The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.

The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push

stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.

“If you allow banks to talk about it, people are just going to assume that the ones that don’t comment about it failed,” said

Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia.

Regulators are using the tests to determine whether the 19 biggest banks have enough capital to cover loan losses during the next two years if the economy shrinks, unemployment surges and housing prices keep declining. The tests are a linchpin of the plan Treasury Secretary Timothy Geithner announced in February to bolster confidence in the nation’s banks and restore financial-market stability.

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