Those of us who are paying attention Have been suggesting for a while now that the stress tests are a way for the Obama administration to stealthily nationalize the banks with limited attention.
As I understand it, the scheme essentially works like this:
- Treasury Department pressures banks, forcing them into accepting bailout money in exchange for preferred shares of stock (non-voting shares).
- Treasury Department creates regulations requiring arbitrary debt/equity ratios.
- Treasury Department performs stress test on banks to evaluate their debt/equity ratio.
- Banks that don't meet arbitrary ratio will be forced to raise private funding (which will be next to impossible in this market), or accept a government "gift" of increased equity by converting preferred shares (non-voting) into common shares (voting)
- Voila! Treasury Department owns large voting blocks in most banks.
- Rep. Barney Frank, Sen. Chris Dodd, Tax Cheat Tim Geithner and Obama are running our banks.