Obama: No New Bailouts

Who says banks have lost their clout? “That regulators are wrangling with banks over the results of these tests shows that they are not confident in their ability to understand the institutions,” writes Breakingviews.com. “That gives banks too much power because regulators are forced to rely on many of their assertions about, say, complex products’ values. It would be better for watchdogs to demand that they reduce their complexity to comprehensible levels.” The New York Times writes, meanwhile, that “the administration seems prepared to argue that, while a few banks may need additional money, the broad financial system is healthier than many investors fear.” Geithner and crew will argue when they release the stress-test results that the needs of the banks can be met with the bailout funds that Congress has already approved. Bank of America, which needs in excess of $10 billion, isn’t looking forward to the results: Like Citigroup, it is trying to raise $10 billion in new capital.