Remember the so-called bank stress tests? They were part of the US Treasury Departments newest plan to stabilize the economy, reintroduce confidence into the market, and provide a whole list of other benefits to investors. The idea was to take taxpayer money (billions of dollars of it) and use it to test large banks abilities to handle even worse economic times.

Now that the tests have been completed for the 19 largest banks in the country, the Treasury Department is trying to decide exactly what to do with the results. It realizes that releasing the results may set off a panic in the economy and cause damage to weak banks stock prices. So it is delaying releasing any results.

In fact, if the government releases the results of the stress tests at all, it may not do so on an individual bank basis. Instead, the results would be released as a summary.

This would give the Treasury cover for having performed the tests while not giving any useful information to the public. The tests are administered by the banks and the government with the results interpreted and summarized by the banks and the government to give investors the confidence they are looking for to keep investing in these banks.

Investors and actual bank customers, of course, can not be trusted to read and interpret the results of these stress tests on their own. After all, if they realized that a bank was insolvent and could not pay them back, they might take their money out of that particular bank.

It would be far better for the government just to tell everyone that, while there are still weaknesses with the banks, as a whole they may be able to weather the tough economy. No need to panic the banks will survive another day and come back as strong as ever to make bad loans to borrowers with no ability to pay them off.

But seriously, the very fact that the Treasury Department is contemplating not releasing the results of the stress tests on an individual-bank basis should be enough cause for concern in the markets.

No one really knows how much trouble these large financial institutions are really experiencing. The government proposed the stress tests as a means of determining the risk of large banks having to declare bankruptcy. If the test results are so bad that they can only be released as a summary, it is safe to assume that every one of the banks is insolvent .

After all, if the banks were really healthy and had passed the test and had enough capital to face a temporary uncertainty in the stock market, they should be proud of the results and want them released on an individual basis. The fact that this is not being done should be a grave cause for concern.

If the point of the stress tests was not to give valuable information to the public about the health of the banks that they were investing in or depositing their money into, what was it? Were the tests just to use government regulators to cover up the bankruptcy of individual big banks but declare them healthy as a whole?

The Treasury will eventually decide whether or not to release the individual results of the bank stress tests. There are only a limited number of options the government will rely on.

First, the Treasury may just release the numbers as a summary, as it is contemplating doing. This will cause more uncertainty than it will reduce, as investors will not know which banks were deemed healthier than the others.

Second, the Treasury may release individual results after massaging the numbers some more. It can manipulate the numbers, pick out a couple of scapegoat corporations to shut down, and declare the rest healthy enough to survive. Score a victory for one government program!

Third, the government can just release the individual test results without massaging the numbers. Of course, if the real health of the banks is what everyone expects it to be (bankrupt without bailouts), then a run on the worst performing banks may commence.

A run on an unhealthy bank is what the government and the banks are trying to prevent with the release of stress test results, but failed institutions that wasted depositor money should not be allowed to stay in business. The fear of a run on a bank keeps the managers more honest than if they know the government will step in and rescue depositors.