'Stress tests' for banks the latest sign of US crony capitalism - by Sin-ming Shaw
For 20 years, Americans have denounced the "crony capitalism" of Third World countries, especially in Asia. But, just as those regions have been improving their public and corporate governance, crony capitalism is alive and well in the United States, a country that the world long considered the gold standard of a level playing field in business. The recently completed "stress tests" of US banks are but the latest indication that crony capitalists have now captured Washington, DC. It is no surprise that stock markets liked the results of the stress tests that US Treasury Secretary Timothy Geithner administered to America's big banks, for the outcome had been leaked weeks before. Indeed, most professional investors trashed the tests as dishonest even as their holdings benefited from a rising market. Even The Wall Street Journal, usually financial markets' loudest cheerleader, disparaged the tests' integrity.
The government had allowed bankers to "negotiate" the results, like a student taking a final examination and then negotiating the grade.