[lbo-talk] Zombie Banks: Ominous Munching Sounds

dredmond at efn.org dredmond at efn.org
Wed Sep 30 19:26:28 PDT 2009


Good article in Bloomberg on the zombie banks:

http://www.bloomberg.com/apps/news?pid=20601110&sid=aHU4bso2L2aE

Bank failures averaged a miniscule 4 per year from 2000 to 2007. Then 26 went bust in 2008. For the first nine months of 2009, we're already up to 95 (the full array of exquisite corpses can be viewed here: http://www.fdic.gov/bank/individual/failed/banklist.html). Meanwhile, the list of "problem" banks has grown to 415 -- a fair chunk of the roughly 9,500 banks in the entire US.

That's not really the problem, though. The problem is that the FDIC list has only $300 billion in assets, i.e. excludes the largest banking groups in the US, which are riding on oceans of free Fed liquidity (TARP plus quantitative easing plus 0% interest rates) but still have supertanker-sized bad debts lurking somewhere on their books -- which is of course why consumer and biz lending continues to shrink.

-- DRR



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