Gretchen Morgenson in the NY Times Sunday says they haven’t satisfied the critics.

Let’s not call it a stress test,” said Janet Tavakoli, founder of Tavakoli Structured Finance, a consulting firm in Chicago. “This was a test to try to get a measure of capital adequacy, using broad-brush percentages. I think what they are hoping is that the banks are going to be able to earn their way out of this.”
Under the US government’s so-called adverse scenario, for instance, banks may experience losses of 8.8% over the next two years on first mortgages they hold. A more likely figure, Ms. Tavakoli says, is 10%.

The country is caught in a rate bind.
Christopher Whalen, editor at Institutional Risk Analyst said keeping interest rates in the cellar to revive banks has significant costs, Mr. Whalen said. For example, institutions that have agreed to pay out interest on investments that are higher than prevailing rates — think insurance companies and pension plans — are getting killed. “The Fed can’t do this for much longer,” he said.

I had never heard of Institutional Risk Analysts, but their Web site is pretty interesting — more about them and their views in a bit.

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