Monday, April 06, 2009

Posen on the bankrupt bank cover up

Adam Posen on what's really going on with the banks: "A number of major American banks have lost huge amounts of money, and clearly have insufficient capital if they are not literally insolvent. Why else would they be pushing so hard to change the accounting rules to avoid showing what they really have on their books instead of raising private capital? Why else is the US government taking so long to perform "stress tests" and trying to get expectations of overpayment for some of the bad assets on the banks' books before the test results are out? In short, the US government is looking to shovel capital into the banks without sufficient conditions, hiding rather than confronting the actual situation."