Treasury and Fed "Heart" Financial Conglomerates?

The "cat is out of the bag" - the regulators performing the 'not too stressful stress tests' will take a harsher view of loans than other trouble assets. So, if a bank does more traditional banking such as loans the 'not too stressful stress tests' will scrutinized them more than a financial conglomerate who may have all kinds of securitized assets and "off-balance" exposure.

Some analysts said regulators are favoring the largest banks because if even one failed that would pose a severe economic risk. Banks that deal in securities are more interconnected to other corners of the global financial system.

I don't buy that excuse. There are politics at play here. The financial oligarchy has great interest in preserving financial conglomerates. The Obama Administration apparently does not want to take on the financial oligarchy.

This is a better excuse:

Regulators also face pressure to highlight the weaknesses of some banks, or critics will dismiss the tests as a whitewash. That would undermine the goal of improving confidence in the financial system.

It is the regional banks that will be sacrificed in order to preserve the financial oligarchy. The regional banks and banks that do more traditional banking are easier targets. It is sad that a bank, in the true sense of the word, will be scrutinized more than a financial conglomerate who negligently underestimated risk and did whatever it could to spread risk through out the global financial system.

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Doesn't pass the smell test

This reminds me of professional sports steroids policy. No super star player ever got busted (well at least not while they were still playing) and they would sacrifice a minor player to show how the testing works and usage will not be tolerated.
Smaller banks will be the losers in this in order for the super stars to keep on playing.
Its easy when you keep getting infusions of free money.... much harder when you have to compete against it.

It has always been about class warfare.

Would any know a real economy if it bit them

I am starting to think they don't have any idea of what to do with a real economy. They have been helping to grow economic bubbles for so long that a real economy is something that is an animal of a bygone era.

There are some making policy that weren't even born to see a time that America was a country with great capital producing industries. Their only economic anchor to reality are the bubbles.

The bubbles were kept alive by ever growing debt. I think what the lawmakers fear is that people will catch on to the game. The game that both sides of the isle have played upon the general population for oh say...about thirty years. The game that all the government statistics on great GDP growth presented by previous administrations was based on smoke and mirrors. It was all a dream. It was the longest running Tulip Bulb bubble in history. Like the froth of a good latte, real capital was resting on the top, in the hands of fewer people.

The politicians are taking advantage of a chance to cover-up their part in the scheme. They will use the upper tier income earners as a scapegoat. They will raise taxes on the upper tier. They will point out the outrageous pay and bonuses. To keep most of the population under control, they will make another type of bubble, an anti-bubble. An anti- bubble were great portions of the population will pay no tax. In fact they will get money from the government in the form of credits. So these people will be happy, the government will print statistics that will show that a major portion of people feel taxes are fair. Hell, who would say taxes aren't fair when they are getting money back...it is the anti-tax buble. BUT this, like the other bubbles will only last so long. It will last long enough until the scape goats die or move away.

Eventually the politicians will need to tackle the real problem. The real problem is to keep people out of deeper debt by having jobs that pay real wages. For most of the population are jobs that come from manufacturing. Yes Bunky, manufacturing will need to come back to the shores of the USA.

The game is almost over and it will be written about in the history books. Will future students wonder, what society in their right mind would move all their jobs to other countries and think they could continue to have a viable growing economy?