THE STRESS TEST LEAKS.

best-of-2008-in-our-business-product-leaks.jpgFelix Salmon wonders "who would be so foolish as to leak these things?" But this seems an inevitable result of Treasury's decision to delay the results so banks can argue "for a more lenient approach." (The fact that we know this is a pretty staggering leak in and of itself.) As Brad DeLong argues, that's bad optics. "The banks should not be negotiating with the government over this." More to the point, the government, at this juncture, should not be negotiating with the banks.

But it's more than bad optics. Now the stress tests have a range of potential outcomes and various actors will take to the press to make their favored outcome more likely. Which is exactly what's happening. Bank of America has denied that it needs more capital. "People familiar with the matter" have leaked that Bank of America in fact needs more than $10 billion. And so on. It's a bit like Gov. Paterson's dumb decision to consider Caroline Kennedy but leave ample time for her supporters and opponents to try and change the outcome. The tool they have is the press. So they use it. Which is all to say that Felix is asking the wrong question. The issue is not who would be so foolish as to leak these results. It's why the government would be so foolish as to cast public doubt on the final decisions and give both sides an incentive to try and pressure the process.

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