From CBS:
The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the final three months of 2010, the highest level in 18 years.
The Federal Deposit Insurance Corp said Wednesday that the number of banks on its confidential “problem” list rose to 884 in the October-December quarter, up from 860 in the previous quarter. Those are banks rated by examiners as having very low capital cushions against risk…
In reality a majority of those 884 are probably insolvent and just kept alive by the FDIC’s part of “extend and pretend” for our financial system. The FDIC simply doesn’t have the resources to take over all the banks which have failed and so lets them limp along until the funds become available…the only way to make a clean sweep of it would be to go to Congress to get a 1980’s style Savings and Loan bailout…but there is no possibility that Congress will bail out another bank.
Fundamentally, the entire financial system is insolvent – even the big banks, primary beneficiaries of both the Federal Reserve money printing and the TARP bailout, are really not in good shape. A lot of their “assets” are garbage (failed loans which the regulators allow them to keep on the books at face value even though they’ll never collect the principal) and so all the “profits” they’ve made are just a means of masking the reality. All will be well as long as they stay just as they are now – in other words, as long as there isn’t, say, a big jump in unemployment, a big spike in inflation, another downturn in housing, etc.
Oh, and did you hear the news of late? Seems like we’re probably going to get a big jump in unemployment as summer comes in, inflation is going ahead at, perhaps, a 10.5% clip and housing is entering a double dip.
Hold on to your hats, good people.
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