Forget Wall Street, beware the crash on Main Street
Institutional Risk Analytics overnight released stress tests of almost all US banking institutions indicating that 1575 of about 8000 are troubled. Meanwhile, The Wall Street Journal has reported that Morgan Stanley, Wells Fargo and GMAC have joined Bank of America and Citigroup in the underfunded bank category. The analytics report is alarming as it reveals that a huge number of banks scored an F, indicating they are severely stressed and threatening Main Street, while the US Administration and the media have concentrated on the big 19 banks crucial to Wall Street.So with more than 1500 smaller and regional US banks slowly starving on dwindling lending income, the implications for Main Street are apparent. As the risk analytics group noted, banks do not or cannot lend as they are unsure of the viability of other companies and financial institutions. While it is vital to ascertain the viability of the big banks so money starts moving through the international credit markets, the same is true for smaller banks that fuel the real economy.
Note EU-Digest: The era of "Zombie Banks" has arrived bringing back a revitalized "Wall Street Casino". The result: a "Main Street" which remains in intensive care with life support systems shutting down.
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