“… equally efficacious, and equally a hoax.” – Benjamin Disraeli, 1848[1] One of the highlights of the U.S. summer for Fed watchers is the annual ritual in which the Fed’s economic soothsayers peer into their crystal balls, a.k.a. their stress tests, to reassure us that the U.S. banking system…
On December 1, 2015, the Bank of England released the results of its second round of annual stress tests, which aim to measure the capital adequacy of the UK banking system. This exercise is intended to function as a financial health check for the major UK banks,…
Anyone who follows the stress tests conducted by the Fed and various European banking authorities can’t help poking fun at them. After all, it’s hard to repress a chuckle when, time and again, a bank passes one of these tests with flying colors only to end up…
Last September Kevin Dowd authored a dandy Policy Analysis for us called "Math Gone Mad: Regulatory Risk Modeling by the Federal Reserve." In it Kevin pointed to the dangers inherent in the Federal Reserve's "stress tests," and the mathematical risk models on which those tests are often…