Lilguy

America's Banks: Are They Really Insolvent?

Such a broad brush, shallow look at the US banking system doesn't explain anything, certainly not whether the system is insolvent.

My own view, in a nutshell, is that the vast majority of US banks are not insolvent, but a few of the most important--starting with Citigroup and BAC--probably are. Unfortunately, because of their global reach, their insolvency indirectly affects the solvency of many US and other banks worldwide.

NTL, I do not think the USG (and US taxpayers) either can nor should try to cover the losses of these banks with little prospect for getting their money back, much less a return on their investment. I believe we must nationalize and bankrupt the insolvent ones, suffering the damaging effects to their counterparties, and then create solvent banks from what's left and spin them off in IPOs (not privately-held banks). Otherwise solvent banks would be eligible for USG aid to counter the effects of their exposure to the bankrupted US banks.