Even if Ben Bernanke is right about the stress tests truly reflecting the “financial conditions” of the banks, it doesn’t matter much. Banks themselves are still worried that they won’t get paid back on old loans.
It’s called the “Shadow Fed.” And it’s the next potential hot spot in the ongoing financial crisis. But few outside the Federal Home Loan Bank system, the Federal Deposit Insurance Corp. (FDIC), the U.S. Federal Reserve and the U.S. Treasury Department are remotely aware of the problems that are smoldering.
While American stocks stumble, Shanghai soars… why Chinese equities are bucking the global trend… More data disasters… ADP jobs report, auto sales register scary declines…Tired of shaking down U.S. taxpayers, GM aims abroad… EU begged for Detroit dollars…Obama, Bernanke talk up Uncle Sam’s book… Eric Fry on how rampant inflation still seems inevitable…Chuck Butler takes a stab at the $10 trillion question: “How long will this dollar strength last?”
Citigroup has slashed its earnings outlook for Wall Street investment banks Goldman Sachs Group, Lehman Brothers Holdings and Morgan Stanley because of a tough operating environment, according to a report by Thomson Reuters.
The second quarter has seen lower client-related trading volumes, little banking activity, losses related to ineffective hedging and reversals of gains on fair valuing liabilities, [Citigroup analyst] Prashant Bhatia wrote in a note dated May 16.
In the currency market, the dollar slipped against the euro. Late Monday, the euro was trading at $1.5491 vs. $1.5424 on Friday.