Who Tests the Stress Testers?

So it looks like we'll be hearing some concrete results about the stress tests in May.

"Early in May, you will see in a systematic and coordinated way the transparency of determining and showing to all involved some of the results of these stress tests," White House spokesman Robert Gibbs said.

The tests will assess how much of a "capital cushion" the banks are likely to need to stay healthy, given the current economic environment, he said.

"Our hope is that banks that are not healthy, or need help, will first and foremost seek that help privately, and then we'll take steps from there to assist them," Gibbs said.

That first sentence is a doozy. "We will be extra transparent in the way we show all of you part of the picture" is pretty much how I'm reading that. Why be selective? Why not be transparent and show everyone all of the results?

And it looks like the FDIC isn't a huge fan of the stress-tests either (perhaps knowing that they're the next line of defense should the results end up being a bit, shall we say, optimistic?), and Nouriel Roubini sounds like he has an answer for my ongoing question concerning the current state of the economy vs. the hypothetical scenarios put forward in the tests. From the RGE Monitor:

The FDIC and Treasury used assumptions for the macro variables in 2009 and 2010 both the baseline and more adverse scenarios that are so optimistic that actual data for 2009 are already worse than the adverse scenario. And for some crucial variables such as the unemployment rate – that is key to proper estimates of default rates and recovery rates (given default) for residential mortgages, commercial mortgages, credit cards, auto loans, student loans and other banks loans – current trend show that by the end of 2009 the unemployment rate will be higher than the average unemployment rate assumed in the more adverse scenario for 2010, not for 2009! In other terms, the results of the stress test – even before they are published – are not worth the paper they are written on as they make assumptions on the economy that are much more optimistic –even in the worst scenarios that the FDIC has designed - than the actual figures for Q1 of 2009.

If that's true, then it points yet another finger at the idea that the administration still feels this crisis is one of "confidence" and not the hard numbers that so many are trying desperately to ignore and/or paper over.