May 8, 2009 – 1:33 am

Another piece of Obama’s economic stimulus was put into play today as the FED released the results of its so-called stress test of the 19 largest banks. The purpose of the test is to verify the financial worthiness of the banks, and estimate their ability to with stand high-stress economic conditions. Given that these banks have received billions of dollars without which they would now be bankrupt and word has it they still need an additional $75 billion among them, one can confidently say their financial worthiness has been verified. They’re insolvent.

The Federal Reserve just released the results of its stress tests. You can see the Fed’s 38-page document discussing those results here, and our list of the 19 institutions is here, along with the capital buffer that regulators say each bank needs to raise over the next six months.

The total buffer required is $74.6 billion, the document says. That’s what regulators say the banks need to survive the dire economic scenario envisioned under the tests. The document also lays out what losses the banks might suffer under such a scenario.

But in the most dire economic scenario envisioned, the FED said let them eat cake.

The results cannot and will not provide “considerable comfort” because the stress test parameters were a cakewalk. In the so called “adverse scenario” the Fed concluded unemployment would peak at 10.3% at the end of 2010 and GDP would fall 3.3% this year. I think we see the unemployment rate at 9.8% by August and 11% by the end of 2009. The adverse scenario is my baseline scenario. The results are skewed from the start as the baseline scenario is pure fantasy.

So how do the banks come up with the next $75 billion?

As we’ve mentioned before, the banks have a number of options for raising the money. In a press conference earlier today, Treasury Secretary Tim Geithner said that his sense was that the banks are “reasonably confident” that they could raise the money privately. If they can’t raise it privately, they could convert preferred shares (which operate like bonds) that the government already holds to common stock.

Reasonably confident means that you can be absolutely certain that you will be on the hook for what is sure to be a lot more than $75 billion.

Well capitalized or not, banks want to pay back TARP funds to escape conditions the Fed attached to the money. CEOs are all itching to give themselves big raises.

The greedy bankstas are itchin at the trigger finger to give back the TARP money so they can pay them selves off with a really big PPIP payday.

If they want to pay back the TARP let them, make them, pay it back to the last red cent. Let the failing banks fail to keep the country from falling into a great depression and stop bleeding the US taxpayer for generations.