Nouriel Roubini: US banking system is insolvent

[marmar]

via Yahoo!:



Roubini: U.S. Banking System Insolvent, Another $2.5T of Losses Coming
Posted Jan 20, 2009 10:17am EST by Henry Blodget

From Clusterstock:

A couple of years ago, when Nouriel Roubini predicted that U.S. financial-system losses would total $1 trillion, everyone thought he was insane. He has since revised his estimate. Now he's looking for $3.6 trillion:

Bloomberg: U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis.

“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.

President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News. Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed.

http://finance.yahoo.com/tech-ticker/article/160553/Roubini%3A-U.S.-Banking-System-Insolvent%2C-Another-%242.5T-of-Losses-Coming

[PM Martin]

1. Where did the money go to?

There have to be assets out there with value.

[RUMMYisFROSTED]

3. It never existed.

[AndyA]

2. Bush's final parting gift to America?

When will the giving end? :shrug:

Note to Obama, Pelosi, and Reid: The American people want accountability. We want to know who is responsible for this mess, who profited from it, and who looked the other way and allowed it to happen. When this is known, we expect charges to be filed, and those parties responsible prosecuted for their deeds.

No moving forward until we clean up the mess left behind. Without doing so, it just festers and gets worse.