December 07, 2009

Scary Bank Info

Well just when you think it is safe to go back into the water.  I ran across an article this evening that is sad, unfortunate and ironic.  Apparently the banks that are having the toughest time paying back TARP funds are the small and regional banks (sad).  These banks have a great deal of exposure to commercial loans and real estate loans making them very susceptible to market pressures for some time and not allowing them to pay back borrowed TARP funds as quickly as the larger banks (unfortunate).  Apparently the big guys, Wells, BofA, JPMorgan, etc. are diversified enough and large enough that they have been able to write down loans, become profitable and are at the point where they would like to pay back the TARP funds so they can get back to business as usual without all of the government bureaucracy involved with taking TARP monies.

Here is the rub, it is now the smaller banks that pose the greatest risk to the struggling economy.  So we can go back in history and say that the large banks were the ones, through over-leveraged derivative trading and bad home loans, that brought about the Great Recession but because of Government influence power and graft they are able to whether the storm but the small banks that had commercial loans and real estate loans but much smaller balance sheets are the ones that are going to have greater problems and will be the ones that will hamper an overall recovery.

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