As Doubts Grow, U.S. Will Judge Banks' Stability

President Obama and his administration declared that they would judge the country's top 20 banks' stability through "stress tests", which will test whether the banks could survive in this global economic crisis as it is worsening.

The big banks are insisting that they are still healthy and that they are capable of regaining their status with the governmental support. On the other hand, it is examined by many economists and analysts that some banks are already insolvent, and are not able to survive in this economic downturn. The critics also say that it would be best to nationalize some of the banks now before the economy worsens even further.

The reviews of banks' stability would put the banks in computer-run "what if" situations to evaluate the banks' ability to survive in Depression-like conditions, such as in times of 10 percent of unemployment rate.

Despite the critics' claims that some of the banks should be nationalized, the Treasury Department maintained that they will keep the banks private. They insisted that they have no intention of nationalization of the country biggest banks. Their intention is to support the banks based on the results of the stress tests, which would give the government ideas whether a particular bank needs more capital now or might need more in the future under the conditions like the computer-run "what if" situations.

Opinion: I agree with the government's decision to judge bank's stability. However, what I don't get is that the decision sounds like that the government will support banks regardless of what the results of the tests say. It says that the government's intention is only to see if a particular bank needs more money or not. However, I believe that the government should stop their financial support for those banks that turn out to be incapable of facing the economic crisis and should start spending more on those that are evaluated to be capable. Many economists have already examined that AIG does not have that capability. However, the government has spent an extremely large amount of bailout money on AIG. What the government has earned in return for their support was Wall Street bonuses that outraged people. I read an Opinion paper a few days ago on a korean newspaper that criticized the Obama administration's imprudent policy that does not give up on insolvent banks, but recklessly holds on to the banks. The opinion paper said that the U.S government should merge insolvent banks and call those executives, who are responsible for the bankruptcy of their banks, to account.