Today the Fed releases the results of the banking industry “stress test.”  You remember this test right?  The Fed created a scenario of economic failure well beyond what is already the worst economic downturn in seventy years.  They then evaluate the banks’ ability to withstand this Armageddon against the Fed’s own made-up base line.  (Let’s not cloud the issue with the idea that the economy is already turning around.)  They then tell the banks which failed the made-up test to take some very not made up actions: increase assets.  How?  Well, that’s the easy part: you can raise private funds (a very tough hill to climb in this credit market), you can accept more TARP funds (that many of them didn’t want in the first place) along with the business stifling, government mandates that go with them, or… you can simply convert the government’s preferred stock into common stock (thus increasing the government’s control of the bank – sometimes to a majority stake).

Interesting results: Bank of America needs roughly 35 billion dollars (despite the $45 billion dollars already given them by the Fed in exchange for preferred stock).  Isn’t this the same bank that took over Countrywide at the Fed’s behest and backing?  It seems that by following the Fed’s request, Bank of America is now more likely to be owned by the Fed.  But let’s leave that bit of conundrum alone.  Let’s take a look at Wells Fargo – by far the strongest of the major banks.  Let me ask you: which was the only major bank to have their results leaked way back on Monday?  Wells Fargo.  Which was the first major bank to ask to return the TARP funds they were forced to accept?  Wells Fargo.  Which is the only major bank not on life support?  Wells Fargo.  When the Fed tested the various banks’ liabilities, which is the only major bank with a portfolio that does not contain 100% financing, option arms and teaser rates?  Wells Fargo.

I don’t know what the Fed’s intent was because I’m not in the group creating the long term plans of this administration.  But it looks an awful lot like a hostile takeover to me.  So, as I don my tin foil hat I’m left to ponder the words of the Fed when they FORCED Wells Fargo and others to accept TARP funds in the first place: “We don’t have any interest in owning financial institutions.”

In the immortal words of Charles Laughton in Witness for the Prosecution, I ask (tin foil hat smartly askew): “Were you lying then, are you lying now or are you not, in fact, a chronic and habitual liar!