Thursday, February 26, 2009

Billions in Uncollectable Loans, Billions!

The scale of the financial crisis reveals itself further and further everyday. Today, in an article from CNBC.com FDIC: Problem Banks Up 50% in Fourth Quarter, it mentions "The institutions [US Banks & Thrifts] wrote off $27.9 billion in loans as uncollectible during the July-September quarter [2008]. ". This is just the third quarter of 2008!

The debate is who is at fault, the banks or the borrowers? I would argue the banks. It's not the borrowers who initiated this problem, it was the banks enabling this. The majority of the banking sector involved is as outrageous. Who's controlling internally the bank's activities and profitability? Where are the directors with long range vision for the banks' health relative to present AND future market conditions?