Wall Street finished the week with another champagne-popping rally as investment managers exhaled after the government published the results of its stress tests on the nation's major banks.
The healing process has begun, Quincy Krosby, the chief investment strategist at Hartford Investments told the New York Times. "You're seeing more conviction buying the banks, where investors are culling the weak from the strong and going into the strong names. The strong will get stronger and the weak will get weaker."
But the headlines buried the real lede.
On the face of it, Wall Street's rally came in response to the better-than-expected news that 10 of the banks must raise $75 billion in new capital. Turns out, however, that the banks had a significant hand in shaping the outcome of their own government-administered exams.
The Wall Street Journal is reporting that that the smaller-than-expected deficit number came about because the Federal Reserve applied a "different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits." The Journal reported that: - CBS News Story
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