To make sense of the Treasury’s stress tests, think like an educator.

Tim Geithner must have a secret longing to be education secretary. Like the Education Department, Treasury has accepted that standardized testing is a necessary evil. Today Geithner and Co. began a two-month odyssey into the banks’ ledgers, testing to see whether they can survive our current nuclear winter, let alone another economic bomb. In principle, the program makes sense; one of the greatest complaints about figuring out how to save banks is that we don’t know just how in need of saving they are. But these so-called stress tests have all of the same drawbacks as a real standardized test—mainly that it’s far too easy to manipulate the results, intentionally or otherwise.

As we assess the Treasury’s plans, it’s worth thinking as an educator, not an economist. The phrase stress test is inherently ridiculous, conjuring up images of a sweaty CEO’s limbs being stretched to see how far they’ll go until they snap. Yet it’s an apt phrase, because the Treasury’s initiative incorporates all the traditional characteristics of the tester-testee interaction. And here at The Big Money, we feel compelled to expand upon the metaphors Geithner delivers unto us.

The main players are the teacher and the students—the Treasury and the banks. The teacher is the one who had the idea for the test in the first place, ostensibly to check in on the students and decide whether they needed extra help. The teacher gives the students a few weeks' notice that they’ll be having a test coming up, but in this case it may as well have been a pop quiz. The banks can’t do much cramming—no toxic assets can be sold at the last minute. They’re either ready for the test or they’re not.

Then there is the test itself, a subjective concoction entirely dependent on the teacher’s desires. There are two key decision points here: the content of the test and the type of test in question. The teacher is the one who decides what needs to be mastered to prove that a student knows enough to move forward without the teacher’s suspicious eye. The Treasury has determined that there are two thresholds the banks need to clear to get a perfect score. First, they need to prove that they can withstand the economy’s expected fall for the rest of the year: 8.4 percent unemployment, 2 percent economic contraction, and a 14 percent tumble in home prices. But that makes them only adequate students. For excellence, they must be prepared for 10.3 percent unemployment in 2010, a 3.3 percent loss in GDP, and a 22 percent drop in home prices.

To pass these two benchmarks, the banks need to prove to the Treasury that they will still have enough capital to survive. This is where the teacher gets to decide the types of questions to ask. They’ll be calculating two competing metrics to figure out whether the banks are well-capitalized enough. (They’re presumably leaving the graphing calculators at home.) In deference to the New York Times’ excellent comparison of the two metrics, I’ll spare you most of the details. But suffice to say that this is a major decision: It’s like deciding whether to create a multiple-choice or short-answer test. The two tests evaluate different kinds of intelligence (read: capitalization) and therefore will yield different results. In the scant details released by the Treasury today, there was no mention of which kind of metric would be used. One would at least hope that the students know how they’ll be graded.

These decisions offer the Treasury Department the same existential problems that educators encounter. How do you decide where failure, adequacy, and excellence all begin and end? Who decides the high watermark that must be surpassed to pass the test? What qualifies that person to be making those distinctions? And once those distinctions are made, what set of questions will you ask on the test? How can you know those are the right questions to be asking to ensure the students’ mastery?