White supremacist wing nut Hal Turner has posted on his blog (no link to him, ever) that he has an advance copy of the Treasury’s bank stress tests, and that it shows that 16 out of the top 19 banks are already insolvent.

Were it from anyone else, I might be inclined to believe it, as it jibes with my sense of the state of the banking industry, but from him, I’d just as soon ignore it.

Only, I’m posting about it, which begs the question, “Why are you reading this?”

The answer is that I’m posting because a Treasury Department Spokesman formally denied Turner’s claims:

A U.S. Treasury spokesman said there’s no basis to a blog posting that buffeted financial stocks by saying that most of the nation’s largest banks are insolvent.

Andrew Williams, a Treasury spokesman, dismissed the report from Hal Turner of North Bergen, New Jersey, “particularly given we don’t have stress test results yet.” Turner has advocated violence against blacks, Jews and immigrants on his Web site and Internet radio show, according to the Anti- Defamation League, created in 1913 to monitor anti-Semitism.

Why is the US Department of the Treasury responding to what amounts to semi-literate scrawls on the wall of a bathroom stall?

I see three possibilities, in no particular order:

• Turner has a friend in the Treasury, who thought that an official denial would get him some air play.
• He actually has preliminary stress test documents.
• The Treasury has come to the conclusion that its credibility, and that of the US banking industry is so pathetically low that they have no choice but to respond.

Honestly, none of these alternatives are particularly good ones, and if I had to place a bet, it would be on the last one, which would indicate that in less than 100 days, Mssrs. Geithner & Summers have completely pissed away their credibility, and they know it.