“Time to End the Bailouts” by Dean Baker
May 12, 2009, 1:00am
Treasury Secretary Timothy Geithner told us last week that the country’s 19 largest banks had passed the stress tests. There are good reasons for questioning the results of these tests.
For example, the bad scenario used in the tests assumed that unemployment would average just 8.9 percent for all of 2009. The unemployment rate hit 8.9 percent last week and it is undoubtedly going higher, so clearly the economy will be worse than what was assumed in the tests.
But, we can skip the details and take the Treasury secretary at his word. If the banks are strong enough to get through the downturn, then can we end the taxpayer bailouts that were supposedly necessary to keep them afloat?