Just as the Royal Banking Commission exposed the pervasive dodgy lending and mickey mouse loans criteria over prolonged periods of time, it goes without saying that the (property price fall) stress tests applied to the banks were also a case of garbage in garbage out self serving exercise.
Nobody would talk about this gargantuan elephant in the room. The banks capital base is frighteningly inadequate to deal with any significant house price falls (20% was then considered a highly unlikely nightmare scenario - now already in sight).
What the banks should really do now is to raise massive capital to bolster their capital base for the inevitable. But in so doing their share price will collapse. 50% easily as market prices in for more raisings and credit agencies (caught napping and in collusion with the banks) start playing catch up by issuing down grades or negative watch.
