Some of the large banks in the United States, according to economists and other finance experts, are like dead men walking.
A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.
None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are insured by the U.S. government. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.
But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.
So, these economists looked at “the marketplace”, and made a judgment about the nation’s largest banks… without looking at any individual banks.
Is it just me, or doesn’t that sound just a bit like making a judgment about the state of “humanity” without looking at any actual humans?
Nor do consumers and businesses need to fret about their deposits, which are insured by the U.S. government.
If the national wealth has been lost through mass bank failures, what good does it do to print the money? FDIC only works with small numbers of bank failures, no?
Shades of the 1930’s. Some of our banks didn’t make it then and some wont make it now. Isn’t it time to fall back and regroup? Our government just doesn’t have the resources to bail out the whole shebang. It didn’t have it in the 1930’s either.