{"id":240,"date":"2013-03-16T11:10:40","date_gmt":"2013-03-16T18:10:40","guid":{"rendered":"http:\/\/andarian.com\/RepealTheBailouts\/?p=240"},"modified":"2022-07-29T21:30:18","modified_gmt":"2022-07-29T21:30:18","slug":"a-politically-motivated-stress-test","status":"publish","type":"post","link":"https:\/\/culture.andarian.net\/parallel\/politics\/a-politically-motivated-stress-test\/","title":{"rendered":"A Politically Motivated &#8220;Stress Test&#8221;"},"content":{"rendered":"\n<p>When it comes to political decisions that reek of &#8220;Chicago-style&#8221; thuggery, it&#8217;s hard to top the Federal Reserve&#8217;s decision last week to fail BB&amp;T Bank&#8217;s most recent Dodd-Frank &#8220;stress test&#8221; :<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>&#8220;After flaunting some of the most impressive capital ratios in last week&#8217;s Dodd-Frank stress test results, BB&amp;T Corporation (NYSE:BBT) shareholders were stunned to discover that the Federal Reserve &#8220;objected&#8221; to certain parts of the bank&#8217;s capital plan.&#8221; (<a title=\"Why the Fed Denied BB&amp;T Corporation (BBT)\u2019s Capital Plan\" href=\"http:\/\/www.fool.com\/investing\/general\/2013\/03\/14\/why-the-fed-denied-bbts-capital-plan.aspx\" target=\"_blank\" rel=\"noopener\">Why the Fed Denied BB&amp;T Corporation (BBT)\u2019s Capital Plan<\/a>, fool.com, March 14. 2013.)<\/p><\/blockquote>\n\n\n\n<p>Given the actual strength of BB&amp;T&#8217;s reserves, its well-earned reputation for financial soundness, and the shock with which this news was received by the market, what should the reader make of the Fed&#8217;s decision? It doesn&#8217;t take a genius to recognize it as a politically motivated hatchet job &#8212; and specifically, as political payback for former BB&amp;T CEO John Allison&#8217;s truth-telling in his book, <a title=\"The Financial Crisis and the Free Market Cure\" rel=\"noopener\" href=\"http:\/\/tinyurl.com\/cmbktfx\" target=\"_blank\">The Financial Crisis and the Free Market Cure.<\/a><\/p>\n\n\n\n<p>Allison&#8217;s brilliant expose on the subject &#8212; drawn from decades of expert personal experience in the banking industry &#8212; should be required reading for any American who dares to think he has a clue about what caused the financial crisis. If you haven\u2019t read it yet, then you owe it to yourself to do so as soon as possible.<\/p>\n\n\n\n<p>This is a book that I CANNOT recommend strongly enough. In it, Allison demonstrates, in exacting detail, precisely how <em><strong>government misregulation,<\/strong><\/em> not &#8220;Wall Street greed,&#8221; was in fact the core cause of the crash. And he explains how new regulations introduced to deal with a crisis of the government&#8217;s own making are putting the US economy at risk of an even greater crisis in the future. I&#8217;m currently finishing my second time through it, and I&#8217;ll probably need a third reading to digest and integrate the wealth of facts it presents. It is <strong><em>that<\/em><\/strong> good.<\/p>\n\n\n\n<p>So given this context, the obvious question becomes: what <em>political goal<\/em> is accomplished by &#8220;failing&#8221; the &#8220;stress test&#8221; of a bank whose financial position is so clearly superior to government standards that the market was &#8220;stunned&#8221; by the Fed&#8217;s decision? To use an already overused aphorism: &#8220;If it walks like a duck and quacks like a duck, it&#8217;s a duck.&#8221; This is a naked attempt to discredit <a title=\"Cato Institute, John A. Allison, President and CEO\" href=\"http:\/\/www.cato.org\/people\/john-allison\" target=\"_blank\" rel=\"noopener\">now Cato Institute president Allison<\/a>&#8216;s critique by smearing the institution he led for decades &#8212; an institution whose whose well-deserved reputation for financial soundness is in fact one of the strongest pieces of evidence for the <em>accuracy<\/em> <em>of<\/em> that critique.<\/p>\n\n\n\n<p>For more evidence, consider marketwatch.com&#8217;s story on the same subject (<a title=\"BB&amp;T, Ally fail Fed stress tests\" href=\"http:\/\/www.marketwatch.com\/story\/bbt-ally-fail-fed-stress-tests-2013-03-14-171033812\" target=\"_blank\" rel=\"noopener\">BB&amp;T, Ally fail Fed stress tests<\/a>, March 14, 2013):<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>&#8220;<em><strong>BB&amp;T\u2019s BBT +0.51% capital was above regulatory thresholds<\/strong><\/em> but its dividend and stock buyback plan was rejected based on an <strong><em>qualitative assessment<\/em><\/strong> of its capital planning process. <span style=\"text-decoration: underline;\"><strong><em>The Federal Reserve did not explain what specifically was the problem at BB&amp;T<\/em><\/strong><\/span>.&#8221; [sic, emphasis added].<\/p><\/blockquote>\n\n\n\n<p>No, of course they didn&#8217;t &#8220;explain what was the problem at BB&amp;T.&#8221; And <em>that,<\/em> ladies and gentlemen, is the kind of regime that America unwisely re-elected to power in 2012.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Given the actual strength of BB&#038;T&#8217;s reserves and its well-earned reputation for financial soundness, what should the reader make of the Fed&#8217;s decision? It doesn&#8217;t take a genius to recognize it as a politically motivated hatchet job &#8212; and specifically, as political payback for former BB&#038;T CEO John Allison&#8217;s truth-telling in his book, &#8220;The Financial Crisis and the Free Market Cure.&#8221;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-240","post","type-post","status-publish","format-standard","hentry","category-politics"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>A Politically Motivated &quot;Stress Test&quot; - Parallel Author<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/culture.andarian.net\/parallel\/politics\/a-politically-motivated-stress-test\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Politically Motivated &quot;Stress Test&quot; - Parallel Author\" \/>\n<meta property=\"og:description\" content=\"Given the actual strength of BB&amp;T&#039;s reserves and its well-earned reputation for financial soundness, what should the reader make of the Fed&#039;s decision? 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