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=**The Treasury's "Stress Test"**=

=Brief Overview and Summary=

On May 7th the government released the results of the "stress test" it conducted on the nineteen largest U.S. banks. The results of the test, which was designed by the Treasury and applied to the banks' balance sheets by the Federal Reserve, showed that almost all of the nineteen banks currently hold enough capital, or nearly enough capital, to be considered "healthy". However, many commentators have responded with scepticism of the test, claiming that it was too soft on the banks, while bank executives have claimed that the test was too stringent.

=Mainstream Media Coverage=

//Example 1//
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BANKS TOLD THEY NEED $75 BILLION IN EXTRA CAPITAL

By EDMUND L. ANDREWS; JACKIE CALMES CONTRIBUTED REPORTING. Published: May 8, 2009

After subjecting the nation's biggest banks to the most public scrutiny in decades, federal regulators ordered 10 of them on Thursday to raise a total of $75 billion in extra capital and gave the rest a clean bill of health. The long-awaited results of the stress tests set off an immediate scramble by major institutions for more capital. By June 8, they must give regulators their plans for raising the money, and raise it by November.

The verdict was far more upbeat than many in the industry had feared when the tests were first announced in February. And the banks that came up short will have to raise much less than some analysts had expected as recently as a few days ago. The stress tests were aimed at estimating how much each bank would lose if the economic downturn proved even deeper than currently expected. But regulators gave the banks a break by letting them bolster their capital with unusually strong first-quarter profits and also by letting them predict modest profits even if the economy again turns sour. Despite an almost tangible sense of relief among the banks and investors, the report card is unlikely to silence an intense debate over whether the Treasury Department and the Federal Reserve let the banks off too easily and glossed over their problems. Under the worst-case assumptions -- an unemployment rate of 10.3 percent next year, an economic contraction of 3.3 percent this year and a 22 percent further decline in housing prices -- the losses by the 19 banks could total $600 billion this year and next, or 9.1 percent of the banks' total loans, regulators concluded. That rate of loss would be higher than any other since 1921. But while the adverse situation was supposed to be unlikely, it is not that much worse than what has happened so far. Unemployment hit 8.5 percent in April and could top 9 percent as early as Friday, when the Labor Department releases its employment report for May. Bank of America was told it would have to come up with $34.9 billion. Wells Fargo will have to find $13.7 billion. And Citigroup will have to produce another $5.5 billion, on top of the $52.5 billion that it had planned to acquire by letting the Treasury become its biggest single shareholder as part of a broader deal. Industry executives reacted with jubilation, as if they had proved their critics wrong and passed the tests with flying colors. The results off the stress tests should put to rest the harmful speculation we have seen over the past few months, declared Edward L. Yingling, president of the American Bankers Association, hours before the results were even made public. Investors had already bid up share prices of the big banks in reaction to leaks about the results earlier this week. Regulators and bank executives alike predicted that most of the institutions would be able to build up the necessary capital from private sources -- either by selling off assets or by converting shares of preferred stock into ordinary stock. With the clarity that today's announcement will bring, we hope banks are going to get back to the business of banking, Timothy F. Geithner, the Treasury secretary, said Thursday. Wells Fargo immediately announced that it would raise $6 billion through a new stock offering. Morgan Stanley, which was told to raise $1.8 billion, announced plans for a $2 billion stock offering. GMAC, the financing arm of General Motors, will need to find $11.5 billion in capital. Last week the government gave GMAC more federal funds after it agreed to be the lender for purchasers of Chrysler vehicles while Chrysler is under bankruptcy protection. Earlier this year, the Treasury Department supplied the company with $5 billion through its Troubled Asset Relief Program. Regulators did not push for the ouster of any chief executives, or demand any specific board shake-ups. They also said they would not subject the rest of the nation's banks to similar stress tests or require them to have additional capital buffers.But Treasury and Fed officials said they would press banks to improve their governance and would reserve the right to demand changes in management. Indeed, Bank of America is expected to announce that it will start recruiting fresh board members in a bid to strengthen oversight. Despite the reassuring picture outlined by Mr. Geithner and the chairman of the Federal Reserve, Ben S. Bernanke, the stress test results hardly silenced critics. It's window-dressing, said Bert Ely, a longtime bank analyst based in Alexandria, Va. Mr. Ely was particularly skeptical about letting companies bolster their balance sheets by converting preferred shares to common. That won't add one extra dollar to a bank's capital buffer against losses, Mr. Ely complained. It's just moving capital from one place to another. From the start, Treasury and Fed officials have steered between what Mr. Bernanke recently described as Scylla and Charybdis -- being perceived as too easy and too coddling of banks on the one hand, or so tough and antagonistic that investors and consumers alike become even more anxious. But the big question, which remains unanswered, is whether Mr. Geithner and Mr. Bernanke will in fact confront banks over their risk management practices in a way that regulators have been afraid to do for years. Officials also disclosed detailed estimates of potential losses at individual banks, concluding that losses could skyrocket at institutions with particularly risky loan portfolios. At Wells Fargo, which was a major subprime mortgage lender during the housing boom, regulators estimated that losses on first mortgages would hit almost 12 percent of its loan portfolio if the adverse situation proved correct. At Morgan Stanley, regulators estimated, loss rates from commercial real estate loans could potentially exceed 40 percent. But analysts increasingly agree that the economic outlook has brightened considerably in the last month or so. Mr. Geithner and top White House officials worked carefully to manage public expectations and avoid the kind of scathing reaction that greeted the Treasury's first big announcement in February of plans to rescue the banking system. Unlike in February, when both Mr. Geithner and President Obama raised expectations in advance, then unveiled only vague concepts, Mr. Geithner took much of the surprise out of the results by emphasizing early on that all the big banks were solvent. The only question, he said over and over, was whether they had enough capital to withstand a downturn that was even worse than the one already under way. In addition, Treasury and Fed officials remained tranquil as most of the results dribbled out through leaks. As a result, the results seemed almost anticlimactic when they finally became public.


 * Focuses on results of tests for nineteen biggest U.S. banks--who has enough capital, who needs capital, and how much.
 * Doesn't scrutinise test itself---was it too soft on the banks, as many analysts have claimed, was it too hard on them, as bank executives have claimed, or was it "just right", as the Treasury has claimed?
 * One quote casting doubt on the credibility of the test result, but nothing beyond that on the issue of the test's credibility.
 * Leading quotes and statements all from government officials---biased towards supporting test and results.
 * Not enough facts of how test was conducted, or of what the Treasury and Obama Administration's roles were in conducting the test, and too much of the government line.

=Citizen Media Coverage=

//Example 1//
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5 ways W.H. made tests less stressful
TAGS: Economy, Wall Street, Finance, Stress Test By EAMON JAVERS | 5/7/09 5:33 PM EDT Text Size:

Thursday’s rollout of the bank “stress tests” could have meant a very bad day for President Barack Obama. The tests were a sort of hypothetical final exam for 19 of the nation’s biggest banks — to see if they could survive a more serious economic downturn. Bad news could have meant market panic, a run on weaker banks, credit markets grinding to a halt. But the Obama administration, through a combination of smart timing, finesse and some good old-fashioned luck avoided the worst — so much so that Thursday’s stress-test results seemed barely a blip, even though they showed 10 banks need another $75 billion in capital. Of course, the banking sector could fall apart again later in the year due to credit card defaults and other developments. But for now, here are the five things Obama and his team did to make the stress test rollout less stressful.

1. They stalled.

When the stress tests were first announced back in early February, press accounts said the results could come within weeks — as early as the beginning of March, even. That would have been a disaster. Wall Street was still emotionally raw early in the year, after the crash of 2008. Any bad news would have made it worse. But the administration didn’t release the stress tests in March, or even in April as many expected. Slowly, market confidence came back. A trickle of good economic data in housing, finance and other sectors coupled with a blast of optimistic rhetoric from Obama put the market in a better mood to hear the test results. “It all depends on the market’s psychology,” said one former Federal Reserve official. “Six months ago it was brittle. You’d get good news and the market would sell off. This week, we’re getting bad news and the market has gone up.” Then, just when the market’s dynamic had turned, the administration announced one more important delay, moving the announcement from Monday to Thursday of this week. White House officials knew that the banks already had the numbers in hand, and they knew that the extra four day delay could help in another way.

2. They anticipated leaks.

One of the classic rules of finance is never surprise the Street. When the banks were given their stress test results a week or more before the official release, they were told not to share the results with the media or Wall Street traders. But the White House knew leaks were inevitable. Obama and Treasury Secretary Timothy Geithner could not afford to have the stress test results hit with a thunderclap. They needed the announcement itself to be met with a shrug. A gradual drip-drip-drip of leaks would accomplish that — and it did. By the time Geithner strode into the briefing room Thursday, the markets knew which banks were OK and which needed new cash. “I think this was the plan all along,” said Scott Talbott, senior vice president for government affairs at The Financial Services Roundtable. “The leaks made the official release a ‘duh’ moment. The best result is for the information to have a soft landing.”

3. They graded on a curve.

The government announced early on in the process that every single bank would “pass” the stress tests, and that if any bank needed additional capital, the government would stand ready to provide it. That sent a strong signal to Wall Street that there would be no catastrophic outcome of the stress test process. What’s more, there were many who argued that the tests themselves were too easy, because its worst-case scenario assumptions weren’t all that bad – in one case, just a slight uptick in unemployment. In some cases, real life is worse than Treasury’s imaginary catastrophe. “The government used assumptions for the macro variables in 2009 and 2010 that are so optimistic that the actual data for 2009 are already worse than the adverse scenario,” wrote Nouriel Roubini, the economic forecaster known as “Dr. Doom” in Forbes magazine in April.

4. They stood back while the banks pumped their numbers.

December was probably an awful month for Goldman Sachs. What to do? Make it go away. The investment house changed its fiscal calendar, so that the year ended in December, rather than in November in the past. That had the effect of eliminating December’s results from public disclosures. Not all the accounting changes were so extreme, but Wall Street changed its mood in part by changing its books. Firms took advantage of new accounting rules that can make the same business results look better on the bottom line – like the way Citigroup added an additional $2.7 billion on the bottom line simply by tweaking the math for the first quarter. It worked. Traders started buying bank stocks again, and the White House didn’t make a peep of complaint. “Some of these earnings, while they looked great, were artificial,” says Camden Fine, president of the Independent Community Bankers of America. “I’m not sure the earnings they reported were sustainable.”

5. They got very, very lucky.

To be sure, it would have been impossible to foresee this exact confluence of events back in February. The White House simply pounced when it started looking like things were coming together, started talking up the economy, put the brakes on the release and let the market do the rest. “I think this is more on the dumb luck side of things than the mastermind side,” agreed Camden Fine. But, as the former Federal Reserve official added: “Yogi Berra said, I’d rather be lucky than good.”


 * Article written the day the results of the test were announced.
 * Looks directly at how White House officials allegedly skewed the test in banks' favour:
 * Waited to conduct test until they thought the results would be as positive as possible
 * Allowed banks to pull accounting tricks to change capitalisation and profit numbers for the year (for example, Goldman Sachs was allowed to change the beginning of its accounting year from December to January to hide bad numbers from December in its report for the current year)
 * Leaked results to the press in the days leading up to the announcement to foster optimism in stock markets
 * Used very optimistic growth projections for the next few quarters to determine how much capital banks would need in each scenario
 * Unlike Times article, challenges the integrity of the test and the honesty of the officials conducting it right from the beginning.
 * On the other hand, this article is an opinion piece, while the Times article is meant to be an objective report

=Mainstream Media Coverage=

//Example 2//
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MAY 11, 2009 =Stressed for Success?=

At the Hotel Geithner, you can check in, but . ..
Stress-testing is what banks and their regulators are supposed to do as a matter of course, albeit more quietly. The current very loud and public effort was advertised to provide an extraordinary measure of transparency at a time when no one trusted bank books. Do markets trust them any better now? Judging by the run-up in bank stock prices from their oversold levels in January, they do. This is progress. On the other hand, all we really have to go on is the word of the federal employees who looked at the banks and estimated their losses against certain economic assumptions. Did they go easier than they might have, and how much did they bend when the banks fought back? The Fed's overview yesterday claimed they ran a "deliberately stringent test" and pegged potential "adverse"-case losses at the 19 largest banks at $600 billion this year and next. Yet markets are also full of reports that regulators showed more than a little forbearance, especially after it became clear that President Obama had no desire to go back to Congress to ask for more public money. With only $110 billion or so in Troubled Asset Relief Program (TARP) funds left uncommitted, it's probably no coincidence that Treasury now sees new net bank capital needs as a manageable $75 billion. And maybe that optimism will prove correct. Most banks are earning healthy profits again, thanks to a low cost of funds and steep yield curve. They're also taking steps to burn bad debt and clean up their balance sheets. Some banks that got too big during the boom are looking to sell some of their operations in order to raise cash. This is how a financial system shapes itself up under the market pressure of recession, with or without stress tests. Not that there still aren't plenty of financial risks out there. On the credit side, commercial real estate is ugly and both home mortgage and credit card losses are a long way from receding. While the economy seems to be bottoming out at last, unemployment will keep rising for several months, which will mean more bank losses. But our biggest question concerns interest-rate risk. Thanks to the Federal Reserve's emergency easing, short-term rates are close to zero. That can't last forever, and the longer the Fed keeps rates this low the more likely it is that rates will have to climb higher down the road to prevent inflation. Remember how the Fed's 1% rate of 2003-2004 rose to 5.25% by 2006 and what that did to housing prices and the cost of bank funds? Yet the Fed didn't disclose the interest-rate projections for 2010 and beyond that it built into its stress test models. On the interest-rate point, by the way, one omen was yesterday's terrible 30-year Treasury bond auction. Treasury sold $14 billion of the securities, but investors demanded yields in mid-auction that were higher than forecast and bond prices fell the most since February. The 30-year yield hit 4.3%. With trillions of dollars in budget deficits still in the pipeline -- even before health care -- Treasury may find the world keeps demanding higher yields to offset the fear of potential inflation. Fed Chairman Ben Bernanke didn't help on that score this week when he told Congress that it was too early to take liquidity out of the financial system because the economy was still too weak. By the time the economy is growing, it will be too late. Think 2004, again. In the wake of the stress tests, the weaker banks will now have six months to raise private capital to fill the hole identified by Treasury. They'll be desperate to do so, because the alternative is that Treasury will force them to accept more public capital. This will include the conversion of Treasury's preferred stock, bought last year via the TARP, into common shares. Under accounting rules, this gives the banks more "tangible common equity," the measure of capital favored by Treasury. Yet it provides not a penny more in actual capital to absorb losses. Meantime, the feds would suddenly own big chunks of those banks via common stock, the way they now are the largest shareholder in once-proud Citigroup. We've called this a back-door nationalization, and it means Congress looking over banker shoulders. The silver lining is that bank executives are now so appalled by this idea that they'll sell anything that moves to avoid such a fate. As for the "stronger" banks, a major goal will be to flee as fast as possible from the TARP, also known as the Hotel Geithner. Banks can check in but it's a lot harder to check out. Treasury has set up major hurdles before a bank can escape, even if it wants to. Clearly banks at risk of failing can't be allowed to endanger the larger financial system, but banks that have adequate capital shouldn't be held hostage to the political worries of regulators. The best that can be said about the stress tests is that they're over. Now the most urgent task is to get back to a financial system free of government guarantees, public capital and political control.


 * Article written five days after announcement of stress test results
 * A news analysis article---opinion and fact mixed together
 * Critical of how test was administered
 * "all we really have to go on is the word of the federal employees who looked at the banks and estimated their losses against certain economic assumptions"---integrity and honesty of test in doubt
 * "With only $110 billion or so in Troubled Asset Relief Program (TARP) funds left uncommitted, it's probably no coincidence that Treasury now sees new net bank capital needs as a manageable $75 billion"---suggests that Obama Administration fudged numbers not only to instill optimism in financial markets, but also to avoid having to ask Congress for more money to recapitalise banks.
 * Banks have six months under stress test rules to raise required "tier one" capital---may be forced to convert U.S. government's prefered stock, which counts towards "tier two" capital and has no voting stake in the corporation, to common stock, which counts towards the required "tier one" capital and has a voting stake. This would be a back-door to government-majority ownership of these banks.

//Example 2//
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(5 May 2009)

The Stress Tests Fail The Smell Test

The results of the much-anticipated bank stress tests are finally set to be released on Thursday -- after the markets close. But we can already give the Obama economic team a grade for the way the tests have been handled: F. For starters, why the holdup in releasing the results? It's been ten days since the Treasury Department and the Fed let the banks in on the preliminary results of the tests. So how come the public -- you know, the ones who keep bailing out the banks -- are still, ten days later, in the dark? The reason is, the banks are using this time to negotiate how much information about their portfolios the hoi polloi will be privy to, and are trying to get the government to reconsider its analyses (which are already iffy, since they are based on the banks' own estimates and on assumptions about the economy - including unemployment rates, and cumulative real estate and credit card losses -- that are hardly stress-inducing). This is the equivalent of a teacher giving a student a look at his grades and allowing the student to try to cut a better deal before report cards are sent home to mom and dad. It shows how out of whack the power dynamic is when it comes to the administration and Wall Street. In the natural pecking order, regulators are above the regulated. They don't ask for permission. And they certainly are not worried about ruffling any feathers. But for some reason -- the Wall Street-centric bias of Tim Geithner and Larry Summers, perhaps, or, as Joseph Stiglitz puts it, the government's confusion of "the notion of too big to fail with the notion of too big to be financially reorganized" -- the banks continue to hold the upper hand (see the cramdown debacle). The delay in releasing the test results also opens the door to potential funny business, with some troubling insider-trading scenarios and a huge payoff, as David Min at the Center for American Progress points out. We've already seen Goldman Sachs raise eyebrows with its sale of $2 billion in non-government-guaranteed bonds last week -- a move that sidestepped its agreement with the government not to disclose the results of its stress test, instead sending a signal to investors that there was no bad news in the stress test for Goldman. Of course, Goldman's receipt of $10 billion in TARP funds and $29 billion in bonds backed by the FDIC might have something to do with how well it is doing. Goldman is typical of the banks' have-it-both-ways approach. By announcing its intention to repay the TARP money it received (thus freeing itself from government compensation restrictions) while continuing to issue government-backed bonds, the banking giant is acting like a man who wants all the benefits of being married while still being able to slip off his ring and have an affair anytime he feels the urge. And then there is the trouble with the assumptions at the heart of the stress tests. As Nouriel Roubini put it: "These are not stress tests but rather fudge tests... The results of the stress tests -- even before they are published -- are not worth the paper they are written on." Nassim Taleb agreed: "This stress test is the equivalent of testing the Brooklyn Bridge by running a single heavy truck on it." The ongoing horse-trading between the banks and the government has only exacerbated the mistrust, creating what the New York Times' Andrew Ross Sorkin, appearing on Charlie Rose, described as a lose-lose: "Either you are going to be very realistic, perhaps even too realistic for many people, and you're going to suggest that some of these banks really are insolvent...or you're going to decide that the entire process is a whitewash and you're going to have no confidence in the test to begin with." When it comes to assessing the health of America's financial system, can there really be such a thing as being "too realistic"? Tim Geithner clearly thinks so. So we are left with the whitewash verdict -- putting us pretty much right back where we started. "This financial crisis," wrote Roubini, "was one due to opacity and lack of transparency in financial markets and due to regulators that were asleep at the wheel. But now the administration officials and regulators have decided to add to the fog of opacity by adding to the lack of transparency in financial markets." And that lack of transparency extends to the artificial choices we are being offered. The way the financial crisis has been presented, there are only two alternatives: either taxpayers keep funneling endless billions into the banks or the banks go under. But there are other options -- options that are infinitely better for taxpayers -- that are not even being considered. The simplest and the most sensible option -- converting debt into equity -- was neatly laid out on Charlie Rose by hedge fund manager Bill Ackman: "What's interesting is that the banks in this country have all the capital they need. The problem is too much of that capital is in the form of debt, not enough is in the form of equity. The way we solve that problem typically in America is through a reorganization process, where a judge adjudicates a bankruptcy or some other form of conservatorship or reorganization. They figure out the value of the firm. They figure out how much equity needs to be raised and they compromise with the bond holders until the bond holder end up owning the firm." Ackman called this "a classic restructuring approach." Then why isn't this classic approach -- forcing bondholders to take a haircut -- even on the table? Joseph Stiglitz says it's because bondholders "would prefer the taxpayers giving them money... And their voice has been heard very clearly. But it's not in our national interest." Once again the question comes down to who is supposed to take the risk: taxpayers or investors? The rules of capitalism are clear on this: the burden must be borne by the investors who, looking for big profits, assumed big risks. Geithner, Summers, and the banks prefer rewriting the rules so that investors get the upside and taxpayers the downside. That's not capitalism, and it shouldn't be allowed to continue. Just as the banks should not being allowed to call the shots on everything from cramdowns to the stress tests. The Obama administration's ongoing loyalty to Wall Street is a virus that holds far more danger than the swine flu (sorry, the H1N1). And the fact that the stress test results to be released on Thursday are unlikely to show the full extent of the sickness of our financial system is one more symptom that Obama's economic team needs to be put in quarantine -- and replaced by people willing to put the public interest ahead of the interests of Wall Street.


 * Written before stress test results announced.
 * Opinion piece---despite its place on a left-leaning blog site, argues against the Obama Administration's handling of the test's administration and announcement
 * Describes power dynamic between Executive Branch and "Wall Street", and between regulators and Wall Street:
 * Government has deemed the nineteen major banks examined "too big to fail" (not in those words)---banks know that Obama Administration will do anything to bring banks back to health, so the banks will let the taxpayers shoulder the burden of cleaning up their balance sheets.
 * Asserts that it is the "natural pecking order" for banks "not to ask for permission" and for regulators "not to ruffle any feathers", but provides nothing in the way of evidence to back up that claim.
 * Quotes numerousn highly-regarded economists (including Nouriel Roubini, who first predicted the financial crisis) as dismissing the stress test as an opaque and wildly optimistic view of bank health.
 * "The way the financial crisis has been presented, there are only two alternatives: either taxpayers keep funneling endless billions into the banks or the banks go under". Subtle criticism of mainstreat media coverage of possible solutions to financial crisis---recognising complexity of the situation.

=Comparative Analysis=

Over the past few months, the Federal Reserve, in coordination with the Treasury and the White House, has administered the so-called “stress test” to the nineteen largest U.S. banks. These banks, each controlling more than $100 billion of assets, are so large that the collapse of one would have dire consequences to the entire financial system—and, since they pose this risk, the Treasury and Federal Reserve have used public funds to ensure against their failure and bring their balance sheets back to sustainability. In order to judge how much capital reserves the banks would need, and in order to reassure investors and depositors that the banks are not close to collapse, the Fed and Treasury conducted the stress test. The claim by the Obama Administration that the stress test is an “unprecedented” measure (as Timothy Geithner said upon the announcement) is very misleading. The Fed tests its member banks every quarter, using similar methods and criteria as the stress tests did, to gauge banks’ health. The only major differences between those tests and the stress test are that the stress test projected economic numbers out farther into the future and applied different possible scenarios to the banks’ balance sheets to model how much capital each bank would need for each scenario, and that the Treasury and Fed released the results of the test to the public. They did this in order to facilitate transparency in the banking system, but transparency, when it comes to bank health, is a double-edged sword: in normal times the Fed never releases the results of its tests because if a bank appears to be close to insolvency, depositors might fear that it is close to collapse, and withdraw their savings from the bank in question, starting a run on the bank and thus destroying it. The Obama Administration made a calculation in releasing the results of the stress test to the public: it figured that the public assumed that every bank is close to collapse, and that the public would need reassurances that this was not the case before they would deposit their savings in the major banks again. The Administration needed a surprisingly optimistic result to the test, and they got it, either by luck or by manipulating the numbers. As the Politico article and the Huffington Post article state, the Treasury told the banks the results of the test and began leaking the vague picture of what the results were to the public weeks before the official announcement. The Huffington Post article criticising the handling of the test was written two days before the Treasury’s announcement, and some newspapers, such as the New York Times, had run articles speculating what the results might be based off of quotes from Treasury and White House officials. [|[1]] As a New York Times article run hours before the official announcement said, “How well many of the banks fared in the tests seems to have become something of an open secret on Wall Street, where the results, and mere whispers of them, have been the subject of intense speculation”. [|[2]] The first mainstream media article, the Times’s lead story on the day after the announcement, looks at the results of the test from a decidedly objective standpoint. Unfortunately, in the reporters’ quest appear as unbiased as possible politically, he merely reports what was announced, leaving out any criticism from non-government sources besides the one quote on the first page and a two-sentence paragraph describing very briefly what criticisms have been made of the test. The Politico blog writer, unconstrained by the requisite of unbiased reporting, lays into the Treasury and White House’s handling of the test from a very critical angle. The Politico writer includes quotes and numbers (probably obtained from the newspaper articles), and then criticises those quotes and numbers. The Times reporter gets the news first, but the constraints of unbiased reporting leads him to report merely the government’s side of the story and not the side of those criticising the test. The blog writer, on the other hand, is free to inject however much opinion he wants into his piece, and he takes full advantage of this, reporting everything the Times reporter does but adding his opinion as a backdrop behind the facts and quotes. Four days after the announcement, the Wall Street Journal published a news analysis of the test to give more of a voice to critics of the government’s handling of the test. This is the one area of the major newspapers outside of the editorial page where reporters and analysts at the papers can look at events through a critical lens instead of an unbiased lens. But the Huffington Post had already published a similar piece a few days //before// the official announcement, a piece that touched on the same points that the Journal article did. The blogs were quicker to act on the speculation of the test that flew around Wall Street, whereas the Wall Street Journal chose not to, perhaps because it did not want to risk looking foolish if the rumours and reports by banks of what their score was proved false. The writers at the Huffington Post don’t have nearly as much a concern, perhaps because they know that the article was buried under other reports in their blog and that their readers wouldn’t necessarily hold it against them if they got the story wrong, and perhaps because the competition among blogs, which are far more numerous than the Wall Street Journal’s rival major newspapers are, is so intense that writer felt the need to come out with a story before the announcement to beat the other blogs to it. Also, the Journal included the official results in its analysis piece, while the Post looked solely at how the test was conducted without even mentioning what the results were likely to be. Whatever their reasons, the Journal came late to the story of criticism of the test, while the Huffington Post reported it very accurately and anticipated the criticisms that would come after the announcement. Comparing the major newspapers to the blogs, the newspapers focused much more on accuracy of what actually happened, and on reacting to the official announcement rather than reaching some conclusion off of speculation. The blogs, however, dove into criticising the stress test before it was even announced and looking at the results with a critical eye as soon as they were released to the public. While the newspapers provided reliable reporting of what actually happened and reacted to that, the blogs proactively, and certainly with at least some political bias, attacked the Obama Administration for the alleged false optimism and questionable accuracy of the test.

[|[1]] “Some Big Banks are Seen in Need of More Capital”. New York Times, Thursday, 7 May 2009 (front page). Reported by Eric Dash and Louise Story. [|[2]] ibid