The rot in the banking system was covered up. It did not go away in the “economic recovery.” It merely festered and grew worse.
Karl Denninger comments on this problem:
My gosh, how did that get out into the media? You wouldn’t know it from the market today….
“If we do not see a meaningful recovery in home prices by the end of the year, we may need to contemplate impairment charges on first liens owned by banks and wholesale write-downs of second lien exposures. This implies solvency issues for BAC [BAC 11.675
-0.015 (-0.13%)
] ,WFC [WFC 28.19
0.05 (+0.18%)
Solvency issues eh? You mean mark-to-market suspension was just another way to lie?
