Economy rocks it like it's 1997

Stocks went into freefall mode again today (this is becoming so cliche), dropping to levels last seen in 1997 -- the same year we were awkwardly coming out of our "ugly duckling" phase freshman year of high school, obsessed with unattainably hot guys and thought "Daria" was the coolest show, like, ever.

The Dow fell 3.4% to close at a staggering 7,114.94. For those unfamiliar with this hodgepodge of numbers, last year the Dow was at a healthy 8,000+. At 7,500 last week, the last vestiges of still-employed investment bankers were retching into their cubicle trashcans. At 7,114, well, let's just say it ain't pretty -- and word on the streets is there's still room for it to get worse.

Enter the Treasury Department. Today the Treasury announced it will launch a new, revamped bank bailout program that would include the option of allowing the government to increase its ownership in financial institutions. Translation: The government wants more of a say in how banks are run, because they are (obviously) doing a crappy job thus far. As you can see by today's steep stock market slide, this news did little to bolster investor confidence.

But there's a difference between the government running a bank, and the government having a say in how it runs itself. The first would be nationalization (which was a hot stock market rumor last week, but turned out to be false when the Obama administration said there would be no bank nationalization and that "private banking is the way to go").

The Treasury said today that beginning on Wednesday, the 20 largest U.S. banks will be required to undergo a new “stress test," which will determine whether each institution has enough capital to survive any further economic spirals.

More details surrounding the stress test will be released on Wednesday by the Treasury, though it did divulge today that if any banks fail the test, the government will require it to raise capital from private sources. If any bank is incapable of raising the money, the bank will be required to swap out the government’s existing, non-voting preferred shares and replace them with new preferred shares that are convertible to common stock with voting rights. Um, what? Basically, as I said earlier, this will give the Obama administration a say -- and not complete governing power -- in the business of each bank, if it comes down to that.