Bank on This...More Bad News Maybe?

News just out that the Banking Stress Test will be completed by end of April.

The Basis is as follows:

1- U.S. banks Under $100B In Assets May Be Eligible For More Capital.
2-U.S. Bank Stress Tests To Consider Losses Over 2 Year time period.
3- Stress Tests To Consider Loan, Trading, and Securities Losses.
4- Banks Will Have 6 Months To Raise Private Capital After Stress Test
5- Banks Needing Capital Will Issue Convertible Preferred Shares
6-Treasury Will Convert Bank Securities To Common Stock As Necessary
7- Banks Already Receiving TARP Funds Can Convert To New Securities
8- Stress Tests Based On Baseline, Adverse GDP, Employment Forecasts

I think these turn of events takes nationalization off the table until April. Not good news in my opinion, but it may lead to some short covering of the financials till then. The market may rally here.

I think the governments tests are just window dressing, as these are quite common in banking circles from what I here.

This buys some time for the banks to "cook" their books as they have been for the last few years. It also gives the regulators some ammunition if they actually wanted to take some action which they won't, because after all they are regulators.

The financials have rallied off their lows quite impressively again mostly on short covering and the abated concerns till at least April.

Its good I didn't get short these....That would seriously hurt right about now.

Trying to stay awake.