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Tim Fernholz highlights a passage from Larry Summers’ speech at Brookings today:

The stress tests now underway will enable a realistic assessment of the position of each different institution and appropriate responses in each case to assure their ability to meet their commitments and lend on a substantial scale. And as the President said in his joint address to Congress, “When we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.”

As Tim says, “That answer, I think, will disappoint almost everyone with it’s lack of detail, but at least doesn’t rule out the various receivership plans people are discussing. Interesting, there was no mention of the public-private partnership that would supposedly be creating a market for the various toxic assets.”

But while it might be wishful thinking on my part, this strikes me as a slightly stronger statement than Tim makes it out to be.  It’s possible, of course, that the stress tests are intended to be fig leaves: they’ll deliberately be done using scenarios that make the banks look relatively healthy and in no need of dramatic action.  But the other possibility is that they’re intended in just the opposite way: as a fig leaf for the president that practically forces him to take dramatic action.  Note, for example, that Summers didn’t simply make an anodyne statement about safety and security, he specifically said that the administration’s response would be designed to insure that big banks “meet their commitments and lend on a substantial scale.”  That’s a stiffer metric than simply being able to meet their payroll.

Like I said, I might be reading too much into this.  But we know two things about pronouncements like this: (a) they’re usually very, very circumspect in order not to panic the markets, and (b) they’re very carefully vetted.  Summers chose his words deliberately here, and it’s possible that they really mean something.

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Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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