If anybody needs a stress test these days, it’s Timothy Geithner.
In February, the Treasury secretary said his department would put the nation’s largest banks through a “stress test” to see if they could survive a more difficult economic environment. Banks that needed it would receive a capital buffer, most likely from the government.
Now that tests of the 19 largest banks are almost done, Geithner finds himself in a no-win situation: If he discloses the results, depositors and investors might flee the weaker banks and potentially drive them out of business.
If he doesn’t disclose the results, the public might assume the banking system is worse than feared or that he is going back on his pledge to improve transparency.
Geithner is under intense pressure from those who want the results made public and others who want them kept private.
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