Well, the financial system failed. And so we bailed it out. But we bailed out the people who were a very large part of the problem to begin with…and so:
Banks have failed to make adequate provision for the losses on loans and securities they face before the end of next year, Moody’s Investors Service said.
U.S. banks may incur about $470 billion of losses and writedowns by the end of 2010, which may cause the banks to be unprofitable in the period, the ratings company said in a report published today…
…Any economic recovery is likely to be “weak and bumpy hook-shaped,” Moody’s said. Banks will also be challenged in an environment where government support is replaced by tighter regulation, the report said. Higher credit and funding costs may force a re-pricing of credit, Moody’s added.
“The fundamentals of financial institutions are still traveling on a downward slope,” Moody’s said. “No-one should consider recent improvements as assurance that the current rebound can be sustained.” (emphasis added)
Which is something I could have told anyone who asked – until banks start acting like stewards of wealth, the banks will continue make foolish decisions. Banks have to realize that they hold our money in trust – its not there for them to merely make profits, but for them to use wisely…if they use it wisely, they’ll make money…maybe not the huge profits short-sighted corporate leeches desire, but profits quite large, none the less.
We should have let them fail last year – we must let them fail when their day of reckoning comes again.
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