Those Stress Tests And The Other N-Word

Marc has a very helpful guide to what Geithner is planning - after a conference call with Obama's peeps. Basically: stress tests will lead to a six-month period in which clearly underwater banks try to get private capital; if they fail, the government will step in:

"We want to make sure that, at the conclusion of the assessment ... there is a clear certainty" that banks will get money from either private sources or the government. It will be forced to take the money, and, "our hope is that some of those institutions will be able to meet that need in the private market," a Treasury official said. Importantly, to preserve confidence in the banks, the government won't release the tests/assessments to the public.  The banks will be required to release, in monthly installments, how much they're lending and who's getting the money.

And here's Krugman's critique.