Are America’s Banks Bankrupt?

July/06/2009 19:36PM
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An employee of Charles Schwab told me that one of their top analysts spoke at a conference and told the attendees that America’s banks may be bankrupt. Shocking? Untrue? Maybe, maybe not.

Statistics show that foreclosures are about to re-erupt. Rising unemployment and falling home prices are the root cause. While home sales are steadying, much of that is attributed to cheap foreclosures selling.

Moody’s estimates that 15.4 million homeowners owe more on their homes than they are worth. In the first quarter 1.8 million homeowners nationwide fell behind on the loans by 60-90 days, up 15% from the prior quarter.

The FDIC has taken over more banks recently. Small town banks.

The credit card debt problem is still looming. The commercial mortgage problem is still looming.

Small and medium sized banks are finding their long-term commercial loan customers are having problems making loan payments since their businesses are in decline. Reduced consumer spending and unemployment is taking a toll on small businesses.

These problems are being kept under wraps by the administration and the media. The government foreclosure moratoriums are expiring. There is a huge backlog of troubled mortgages that will be dealt with soon.

Can the banking system survive the next round of problems? Evidently the expert at Schwab is questioning whether it can.

Stay tuned.

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