Tests Replace 'Uncertainty With Transparency'

Tests on the biggest banks will make raising capital, paying it back easier
By Clay Dillow,  Newser Staff
Posted May 7, 2009 7:56 AM CDT
Treasury Secretary Timothy Geithner speaks during a news conference after the conclusion of the G7 finance minister and central bank governor meeting, Friday, April 24, 2009, in Washington.   (AP Photo/Manuel Balce Ceneta)
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(Newser) – In an op-ed piece in the New York Times today, Timothy Geithner positions the stress tests—whose results are released officially today—as a way to restore longer-term confidence in the aftermath of the "tentative stability" achieved by the last administration. "We chose a strategy to lift the fog of uncertainty over bank balance sheets and to help ensure that the major banks, individually and collectively, had the capital to continue lending even in a worse than expected recession."

He explains that this "exceptional assessment" was designed to strike a balance between being "overly punitive" and understating the potential need for more capital. Some banks will need to raise capital, and some will start paying it back, he writes, but by replacing “uncertainty with transparency,” both will be easier.