Harry Rady of Rady Asset Management discusses his apprehension concerning the stress tests that government regulators are subjecting financial institutions to during the present economic downturn that the United States is facing at the moment.
Rady’s first concern is that the regulators don’t really have the “big picture” in mind. He believes that the stress tests are too homogeneous and rely too heavily on quantitative metrics.
His other concern is that there is a built in conflict of interest between the regulators, shareholders and management. The job of the regulators is to make sure that the companies stay solvent and that the flow of capital is unobstructed. They are not doing anything to protect the interests of the shareholders.
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Harry Rady Discusses Govt Stress Tests on CNBC “Closing Bell”