Bank stress tests results due Thursday

[0:19]" I really don't there's been so many leaks coming out of the regulatory agencies that at this point to see it seems pretty well vetted. I don't see any surprise is I think the Treasury's probably surprised that. That one area. Monster they've created by this. Stress tests that they announced back in February and I don't think they'll be any surprises tomorrow. I know from talking to our friend Bob -- yes sort of thing takes place all the time but certainly not this ballyhoo. Do you think that if things could've been done and over that maybe it would have been better to keep it quiet. I'm sure treasury in the regulatory agencies are asking themselves that same question right now. I think one thing that -- done for example is a week ago. Almost they've put out yesterday. A public announcement of the methodology. That they used for the stress test I think that would have been a lot better had they put it out in the beginning or early on in the process rather than at the end at the end. It sounds like they are reads like a rationalization. Of the process rather an explanation of the road map -- they're going to follow. So that this probably ought to things that they wished they had done. Differently. To tamp down the expectations of the public on the markets and now have about the results and -- and banks Oxford last week -- Willy -- all over the place as a result we but they've been willing -- over the place for a good part of an eighteen months now so I don't attribute that so much two it. As. As the fact that. You know we have two things going on we have the stress tests but that we also have this. Other large component which is the purchase of toxic assets the so called legacy purchase program and -- these two. Massive events really haven't to the public's mind and coordinated. No maybe there have been the Treasury's mind but I think in the public's mind and in the market's mind. They have not because we're in each case we're talking about hundreds. Billions of dollars of food bank capital beds in place."

[2:21]" At the end of the day on do you think that I guess. There will be renewed confidence in the banking sector or do you think that in -- to look at banking with sort of jaundiced --"

[2:35]" Well that's that's the 64 dollar question that's that's what the announcement that confirm were it was supposed to lose to. Improve confidence I think at the end of the day you know between chairman Bernanke's testimony yesterday -- he pointed to a lot of of tentative. In -- show of oh reaching a bottom. You know if we don't have anymore. Tectonic events of the then you know hopefully will at least reach a bottom and not get any worse for awhile and begin to. Achieve a gradual recovery. But if we have any major hiccups then than will be worse off than we were before. Dinner and a major -- would be if for example I'm wrong and the stress tests do produce a huge surprise tomorrow and a and a major bank has to be closed or consolidated into another one that could set us back materially."

[3:36]" I was watching TV this morning MP memories he was saying that he's worried about they're being more foreclosures coming in the pipeline could upset the."

[3:43]" Collapse of foreclosures of banks' normal closures of oh well that's going to happen anyway and it's authority that expectation is already built them. You know we have vote loans that are re setting we have property values going down and and in fact the stress tests were designed to accommodate. And test for that very. Phenomenon so that that's going to happen I don't think anybody expects that. As a result of the stress tests or any of these and issue that Bernanke's is identifying but tonight things are already. Are going to turn Rosie all of a sudden we we have always ago definitely."

[4:35]" Well it's being it's it's being interpreted as a good sign because they are you have 45 billion dollars in preferred shares and the form of an investment by the taxpayers. You know large chunk of that could be converted into common. To help improve there tangible common equity. And they have identified other things that they can do including sales of assets and perhaps. Perhaps raising private equity so. Did just that you know the fact that they have identified who they think they have identified. The number that needs to be raised is being portrayed as a good thanks. The uncertainty however and again that this goes back to the legacy loan purchase of this other large component that I mentioned. On the looming uncertainty is to have today valued properly the assets that are currently on the books and most folks from the capital markets believe that there it is. A lot more. Downgrade that has to be taken on these loans and assets that are currently carrying cell overly optimistic. Yeah I think the banks are being overly optimistic right."

[5:53]" Shiite. If he does seem to be optimistic I'm not quite that optimistic you know at the local level here today we're going to hear from. Representative Mercury chairman of the Ways and Means Committee about that the local the state impact of this and we know from this morning's paper -- local economists are now predicting bad news in the state for the coming four or more years. I think what's going to be a long slog. But what but the best part is that. When the mindset is right to know whether that's because of inventories being. Rundown -- housing prices not declining anymore what whatever those combination of indicators are when the mindset clicks in that hate. This is the bottom of it. Then then we're on the way to recovery right mentally and and its as you your question indicated it is all about confidence and."