I see an economic diasater coming...

[the_big_m_in_ok]

For anyone else that is tracking bank closers, 140 last year with a start of 10 this year already.  by the way 140 are the most banks closed in a single year since 1994.  And if anyone else is conserned with the amount of money in the FDIC they will keep telling you that they still have access to 500billion treasury money, that being said they have already spent 584billion on bank closings last year.

They also warned they don't have enough.  They'll need to be bailed out if this trend continues.  People may quit trusting the whole banking system.  Bad scenario.

--Lee

[the_big_m_in_ok]

5 million households and the unemployed as well(combined in numbers) will cause huge social/financial/legal stresses on the economy.

And, there another fact that was seen by an analyst on TV recently:
Banks aren't reducing the worth of distressed properties because they want to keep the price high for their good bottom line.

Obama may force them to change, and write off some of the cost, but banks will loose money no matter what happens.

There doesn't seem to be a good way out of this.

--Lee

[Azorus]

The problem with that is if banks devalue the property to much it makes their bank fail.  According to the FDIC banks have to keep a certain amount of assets capable of covering at most of there depositors.  This means a bank can have unlimited psychical assets as long as they have enough money to cover 75% of there depositors at any one time.  So if you devalue housing to much it is possible to drop total asset values of large banks below the amount of money depositors have in them.  This is what they fear because that means they are running without money and Technically the FDIC has to come and and close them down.  Though because the FDIC is already in trouble they have been hesitant to close on some banks that are already under.

[the_big_m_in_ok]

Azorus said:

The problem with that is if banks devalue the property to much it makes their bank fail. ... This is what they fear because that means they are running without money and Technically the FDIC has to come and and close them down.  ... 

Yes, I agree.
There's something also:  Banks are reluctant to lend money to anyone they think won't be able to pay them back in the future(about everyone, really).

The banks get hurt financially "coming and going".  They can see many borrowers as credit risks and also their assets aren't worth enough to sustain them in the long run.

I imagine Europe and Asia are in the same boat.  And, the boat is getting smaller and may spring a leak, as well.

--Lee

[Azorus]

I thing i heard a while ago was that banks, according to federal law, have to lend money.  it makes sense, but they have to lend money to a certain amount of people no matter what according to the law, will have to look it up later.  And if banks don't lend money to these people they have to pay penaties for this, making it hurt worse during this economic meltdown.