Still Picking Apart the Stress Test Results

For better or worse, plenty of people are looking at the bank stress-test results released late last week as a benchmark for the state of the financial sector and the economy as a whole. The New York Times cautions that any overly positive spin on the results should be taken with a grain of salt. The consensus that the Fed would like to promote, according to the article, is that the banking mess of the past two years is finally becoming manageable. Its message: "All is under control. Nothing to see here, folks. Move along."

While most of the banks probably want to move along themselves, some executives are still dissatisfied with the test results, says the Wall Street Journal. "We didn't necessarily like the number," said Wells Fargo (WFC) Chief Financial Officer Howard Atkins. Still, the figure for the bank's expected capital shortfall ($13.7 billion) came about after two weeks of bargaining, when the government made concessions to banks that pushed back against its conclusions. According to the Journal, the Wells Fargo figure had been $17.3 billion prior to adjustments and negotiations.

Beyond the concessions already made, according to the Financial Times, the government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. “The agreement, which was not mentioned when the government revealed the results on Thursday, means some banks may not have to raise as much equity through share issues and asset sales as the market is expecting. It could also increase the incentive for banks to book profits in the next two quarters,” FT writes.  

With the market showing signs of life, the New York Times boldly proclaims that the "free fall" is "over." While the headline is optimistic, the article goes on to question whether things are getting any easier for the average American, examining life in Boise, Idaho, as a microcosm. While home sales in the city are on the rise, it's still hard for local business owners to obtain credit, the article says. As one local businessman said, "Everybody's still feeling the pain, but we're starting to see a little creep up in confidence."

Chrysler's bankruptcy is causing pain for Nascar too, says the Journal. Drivers that cherish Chrysler's "once-mighty" Dodge racing cars are unsure about the future of their favorite wheels or the prospects of any American-made cars keeping up with the competition for that matter. This comes as another blow to a sport that, like many others, has slowed down significantly, thanks to the economy. 

And finally, not even a downturn can keep loyal fans away from buying tickets to Star Trek. According to the LA Times, the film "beamed up $31 million Friday and Thursday evening, putting it on a path to gross more than $70 million and possibly more than $80 million in ticket sales for the weekend." While the article estimates that the movie will bring in less than Fox's X-Men Origins: Wolverine did last weekend, it predicts a stronger performance over time due to "overwhelmingly positive reviews and online buzz."