What's the plan for the US banking industry? Nationalizing and cleaning them up? Letting them collapse? Breaking them up to prevent too big to fail? Geithner is going to have to wake up sometime soon or Obama is going to need to make a change because the banking situation - which Geithner was supposed to be watching in recent years - looks no better today than it did last year, maybe worse. Having a plan is not such a bad idea, but that doesn't look like anything exists right now.
America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.
Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.
The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.
The banks' potentially huge losses, which could be contained if the economy quickly recovers, also shed new light on the hurdles that President Barack Obama's economic team must overcome to save institutions it deems too big to fail.
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