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While automakers Chrysler and GM have pledged.
And pleaded for TARP funds to stay alive many financial companies are begging the government to let them out.
From the onerous terms of the loans and to date the government answered there which is allowing ten.
Of the nineteen major banks repaid -- TARP money.
But congressional oversight panel which is investigating the TARP program.
Warns the banks may not be as healthy is believed in a report released today the panel suggests.
The stress tests may not have been stressful enough.
-- scored -- is chairwoman Elizabeth Warren ms.
Warren thank you very much for joining us right now so so tell -- if the stress tests weren't.
Stressful over -- strong enough.
But what could we have done differently.
Well actually let's start with the good news we got in some financial expert.
Academic experts who took a close look.
At the basic model of the stress test and bear their statement on -- since it was a good conservative model.
The problem is no model is better than the -- she feed into it and -- a couple places where we have some concerns for example they only rented out to December of 2010.
But if you take a look at the projections where these banks are with a lot of commercial mortgages.
On their books that are gonna -- mob.
And projecting a lot lot of trouble there.
So the notion is a stress test that goes for a little longer period of time.
Second one remember there was a worst case scenario for 2009.
And a big part of that worst case scenario.
With that we had an unemployment rate that averaged eight point 9% across the year.
All we just hit an unemployment rate of nine point 4%.
Now that doesn't bring the yearly average -- past eight point 5% if you'll forgive all the numbers.
But the point is those -- bad numbers and they -- in the wrong direction.
Congressional oversight panel recommends that we ought to be running more stress tests and running with little tougher numbers that is what -- -- Listen I've been through this I was here when we're talking about these stress that's in fact -- predicted all nineteen would would would pass.
Marvelously miraculously they all did why now why not the congressional oversight panel.
Make recommendations to Tim Geithner and crew et -- And say hey look these things need to be tough test not just you know -- you show up -- you pass.
You know we have to keep pushing on this we return to the same three things that you and I have talked about multiple times before.
This is about transparency.
We need to see the workings of these tests.
You know if we know exactly how the tests were complete -- I had the formulas laid out there.
You could sit here and -- in some alternative numbers.
And that would let us figure out exactly how these institutions are doing.
That would also tell us whether or not these tests are robust.
Meaning you know there's a slight variation from the numbers that were pumped into it.
Do you still get the same kind of result.
What -- really looking for here transparency.
Real accountability with the banks and real clarity in the government's program.
We think we're doing better I I don't want to forget that part of it.
But we still have some some space to go here not ms.
-- you know listen.
I agree with you wholeheartedly we are looking for transparency and accountability my problem is.
They've all asked -- basically say you know send the signal.
All clear in the financial industry right now people now probably investors jump back into some of these stocks.
They're involved a 401 -- are at risk now -- it's funny maybe they weren't strong enough that.
You know -- let's let's remember at the time these tests were released.
Even the Treasury Department.
Tried to say you -- it's it's limited you know here -- the factors that have been pumped into it.
All of the market can't take this as a one calling deal all we get a stress test one time and now it's over.
It's not over we are still in the middle of -- financial crisis I don't think I'm delivering this year I believe we know that there's still trouble.
And if there are deteriorating.
Economic conditions for example.
If there -- more people losing their jobs and therefore unable to pay their mortgages and unable to pay their credit cards.
And I'm able to buy new credit products that's gonna have an effect on the financial institutions.
Ultimately more information is better.
We can't have a stock market we can have a stock price.
This built -- I don't that's built on -- -- if it's got to be grounded in reality even that realities kind of -- Now I gotta tell you I'm not what you might figure necessarily that you guys I'm I'm kind of point my finger at Tim Geithner right now now they tell me that.
Hey we -- looked forward not I guess at the current snapshot at the time.
You know unemployment rate has been rising since then what he they they did the crew didn't realize that that may be the case and therefore putting.
You know certain amount of the hurdles for them across frankly all nineteen banks -- those hurdles now the unemployment higher than they expected they may not passing saying that maybe if we read we could take a look practical and those in nineteen.
Would all nineteen still pass.
-- Put it this way if we -- running tests again and we Rodham with tougher numbers that we have a lot more confidence that things are looking up those things are better.
And if that's not the case then we need to know about it but I just can't say -- strongly enough.
What we need is we need some reality that's just that that's just the core of the game.
Markets don't operate businesses don't operate unless they have their feet firmly planted on the -- Congressional oversight keeps asking for transparency.
Because we want to see the numbers we want to see the formulas in -- work but but look.
I I do want to say we embrace the notion of a stress test we're not.
We're not down treasury about that I think they've done a good job.
By putting a stress test out -- I think they've done on -- a remarkable job by releasing as much information as they've released.
I just want more.
Hi Elizabeth -- my only concern here let me just finish this -- would -- is that they -- a lot of money post stress tests of blood that was based on the fact that they did.
In fact pay pass those -- so a -- secondary offerings by some of those banks.
But thank you very much please keep your eye and then he'll report back to us who want to.
We want to have you back if that's all right.
You bet all right -- now we do.
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