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Looking at the Stress Test Leaks

My, what a leak fest we have going on.

Begining late last night various reports started trickling out about how much of a capital shortfall Bank of America is facing in the government's much-heralded stress test of financial institutions.

After some debate about what the stress test results actually mean (do you really need more capital or can you just adjust the amount of common stock you count against your liabilities -- discussion here and here) we started getting reports about what other banks (including Wells Fargo , JPMorgan , Citibank and others) may be facing. (Get our latest rundown of that here). All of these are based on unidentified sources, which you ideally don't want in journalism but, hey, you gotta do what you gotta do.

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This flood of reports will make Thursday's after-market close deadline -- when the government is supposed to release formally the stress test results -- rather anti-climatic.

So why all the leaks? Well, from the bank side of the equation, leaking the results (or at least the gist of them) kind of preps shareholders and softens any massive fluctuations in share price. Leaking incidently helps the government too, in terms of preventing any wild market swings and knee-jerk public reactions.

Nevertheless, it's one of our top stories today. The other top story? Bernie Madoff's secretary dishes on his possible motives and his apparent massage parlor thing ...