Geithner Bailout Plan May Speed Bank Failures

More banks could fail as a result of the government's plan to test the health of prospective recipients before doling out new federal aid -- and maybe that's part of the point, analysts say.

The government will require so-called "stress tests" for banks with at least $100 billion in assets as a means of determining whether they need capital, Treasury Secretary Timothy Geithner said in unveiling the next stage of the financial bailout plan on Tuesday. While Geithner was vague on exact details of the plan, the stress test could be used as a way to allow certain financial institutions to fail, says Quincy Krosby, chief investment strategist at The Hartford.

"There seems to be a growing concern that perhaps we do need to allow banks to fail if the systemic risk and the ensuing doesn't replicate what happened after Lehman Brothers' demise," she says. ...