What You Don’t Know Can Kill You

Let me get this straight. There was this promiscuous orgy of borrowing and leverage where people got drunker than Irish sailors at a free Chinese whorehouse. The real estate and debt bubble has burst, banks all over the world are in trouble and now things are going back to normal because the market will be going up soon. It just can’t keep going down, right?

Sorry, but that dog won’t hunt.

More banks are going to fail. We just don’t know how many more. Thus far, only 13 banks and S&Ls have failed this year, through September. Back in the heady days of the S&L crisis, there were over 800 financial institutions that failed and it cost taxpaxers over $350 billion. Granted, there are fewer banks now, and they are bigger, but we just don’t know the extent of how many more can and will fail before all this is all over.

As of the June 30 report, 117 banks and S&Ls were on the FDIC’s problem list. That’s only a fraction of the over 8,500 banks and S&Ls covered by FDIC.  However, it’s interesting to note that on that same report, two banks weren’t included among the 117.

WaMu and Wachovia.