Stress Tests You Haven't Read About

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As reported this week by the New York Times, most of the big banks passed the so-called "stress tests" administered to them by the Federal Reserve.

Developed in the wake of the financial crisis, the examination is intended to assess how banks will fare under weak economic conditions. The Fed looked at whether banks would have enough capital to weather a peak unemployment rate of 13 percent, a 21 percent drop in housing prices and severe market shocks, as well as economic slowdowns in Europe and Asia.

Given the success of the tests in assessing the health of the nation’s largest banks, various other institutions decided to embrace the model. Here are some early results.

Markets Surprised by Bill Simmons' Stress Test Outcome

Friends of Bill Simmons were just as surprised as he was when data from the Federal Reserve revealed that his relationship with Julie Lasker failed their stess test.

The couple had been going out since 2011Q2 and going into the stress test, Bill spoke confidently to friends of solid reserves of trust, listening/sharing skills, and satisfying relations in…um…all areas.  Markets were particularly confident following recent quarterly reports wherein Bill alluded to “three little words” having been said by both sides of the merger.

The Fed’s test, however, proved surprising rigorous.  Simulations included subjecting Julie to Bill’s:

–not listening to her as she described work-related conflicts

–favorable allusions to his last girlfriend

–buying her big earrings when she likes small ones

–repeatedly leaving the toilet seat up

Despite earlier reports regarding the stability of Bill and Julie’s relationship, reserves proved inadequate for Julie to withstand the full spate of stressors administered by the Fed.   Neither could be reached for comment but late trading suggested friends are divesting shares in the couple, or at least in Bill.

Cute Kitten Fails Stress Test – Will Likely be Returned to Shelter

The children of DC-based economist Jared Bernstein were stunned to discover that their new little black kitten, Ivy, failed her stress test and may be headed back to shelter from which they adopted her only weeks ago.

Bernstein reported that the he was unable to give the kitten passing grades under stressful simulations including:

–continuing to kick her nasty litter outside the box and all over the floor of his bathroom

–running around like a banshee at midnight and biting his toes through the blanket whenever he even slightly wiggles them

–lightly scratching his face at 6:30AM when she wants to be fed

–running off with those nice little earbuds he keeps on his nightstand

The children’s shock at the failure was compounded by their claim that Bernstein appeared to love the little scamp, often, according to them, talking to it in a cutesy voice.

“It’s true,” Bernstein admitted, when reached for comment.  “I continue to love little Ivy and we will all miss her.  But the stress test has enabled me to test the depth of that love and it turned out to be shallower than I’d thought.”

President Obama Squeaks Through Stress Test With His Base

In a widely anticipated result that was too close a call for markets to accurately price, the American Left gave President Obama passing marks in a stress test designed to test just how far he could push them.

“It was touch and go, but we had to consider the alternative” said the Left, following release of the test results.  Simulations included:

–press briefings where the President taunts enviros with charts about all the oil and gas this administration has drilled and fracked

–inviting Occupy Wall St. representatives to a White House summit on income inequality, wherein he announces another round of bailouts for the banks

–schmoozing with Wall St. fat cats to fund his Super Pac

–pivoting back to deficit reduction, praising Europe for their austerity measures, and telling American families how the government’s got to tighten its belt in hard times, just like they do.

While some members of the professional Left argued for failing the President, a majority of others pushed back, at which point the first group splintered off and formed a new movement disavowing any association with their former comrades.

 Cross posted from jaredbernsteinblog.com

You can email me at info@jaredbernsteinblog.com. I look forward to your feedback.

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities. From 2009 to 2011, he was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team.

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How to Build a Fairer Economy
What Obama's State of the Union Got Right
Jobs Report: Good News, but a Long Way to Go
It's (Almost) Time to Raise the Minimum Wage
Reasons to Like Obama's Budget
Why Manufacturing Matters
Obama's Corporate Tax Plan Calls GOP Bluff
Gas Price Pandering WAY Up
The Case for Full Employment

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