This is the Cato Daily Podcast for Friday, May 8th, 2009. I'm Caleb Brown.

As stress tests results are reveal for banks in the United States, what did they really give us?

Mark Calabria, director of financial regulation studies at the Cato Institute,

believes that if information was what investors were lacking, we needed it more than a year ago.

The real value provided by these stress tests is to get you a uniform measurement across institutions.

I mean, prior to that, you had each of the institutions running their own internal models.

I mean, while you had the basic capital rules, you didn't have as much of ability to compare apples to apples across institutions.

And also a very big plus was that these stress tests brought in off-balance sheet items.

And one of the big questions in this whole financial crisis is

sort of where these assets at that weren't on balance sheet and that was for instance

what did in Bear Stern so I think that has been a great value and I think that will be able to give people a little bit,

maybe not certainty but they'll have at least some knowledge of where the bombs are that lay.

When I spoke with Anna Schwartz on the subject of determining the quality of banks, she suggested

that as soon as some rumbling started occurring within some major institutions on Wall Street, the

Fed should have sent essentially auditors in and gotten a bunch of information to

the public as quickly as possible to so that the public could

determine the quality of the bank's balance sheets.

I think she's a 100% right on that.

I will tell you when I first

heard the proposal of stress tests you know my first reaction was

weren't you guys doing this already what do you do is bank regulators so some of this you know is kind of covering of their posterior years in terms of trying to say that they were doing their responsibility

because a lot of this the regulators should have been doing otherwise. The caveat is here you're trying to get that

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