The Fed’s warning to banks that tougher stress tests are coming, so they should be making extraordinary preparations, is tantamount to passing out cocaine while warning that tough new drug tests will follow.  What does the Fed believe is the cause of this excessive risk taking if not its own policies to flood the banks with zero interest rate money?  Its explicitly stated purpose is to make funds available to those who would not receive loans otherwise, due to the natural interest rate pricing them out of the market.  But that is a good thing! Why should anyone desire to lend money to someone who cannot pay them back, which is exactly what the Fed’s actions are designed to accomplish?  Madness!!!!

Patrick Barron