Elizabeth Warren, chair of the congressional oversight panel tasked with overseeing the spending of TARP funds, concluded her recent interview on Morning Joe (video below) with this statement, “if we don’t keep the American people as part of the conversation, the decisions that will get made, will not be the decisions that are best for them. And that’s what matters.”

This struck me as a profound statement. Not just as reflection of how our government, media and citizens should perform in general. Or on this matter in particular. But as a indication of where we are at, in this moment in time, as a nation. That these stress tests are not just about banks, their assets and their results – good or bad. These stress tests have now become something of a stress test of our government. And we are anxiously awaiting the results.

Will our government be honest in its actions and truthful in its words? Will our government treat the American people as true and active partners in our government? Or will we be shut out of the process and delegated to the role of viewing audience?

I don’t know whether our government will pass or fail this stress test. I only wish I was more confident of a positive result.

So what do you think – Will our government pass its own stress test?

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Since regulators are set to release stress test results on 19 of the biggest U.S. banks on May 4th and a paper on the methods used on the stress tests on April 24th, it seemed fitting to review the goal of the stress test and what is at stake with the results. Not just for the banks, but all the rest of us. A subject on which both Elizabeth Warren and Eliot Spitzer, also a recent guest on Morning Joe, had more than a few worthy insight.

From Bloomberg:

The results of next month’s stress tests are designed to provide clarity for the market, by eliminating uncertainty about the financial health of banks, said White House economic adviser Jared Bernstein. “They want to know that this diagnosis is going to provide useful information about the health of the balance sheets of the banks,” Bernstein said in an interview with Bloomberg television today.

The tests are designed to mesh with the administration’s effort to remove distressed mortgage assets from banks’ balance sheets, which have hampered lending to consumers and businesses.

In their assessments, regulators will look at off-balance- sheet commitments, earnings projections, risks of the banks’ business activities and the composition and quality of their capital, according to the Treasury.

The exams will help provide a ranking of the financial health of “one institution relative to another,” Frederic Mishkin, a Columbia University economist and former Fed governor, said in a Bloomberg television interview. “That can be very useful if government then decides it needs to take steps to deal with weak institutions.”

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