Will It All Come Tumbling Down?
• The Market TickerLet's juxtapose two stories. First, from Bloomberg: Aug. 14 (Bloomberg) -- More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival. Ok. Now how about this one? WASHINGTON (MarketWatch) -- Delinquency rates for loans and leases at U.S. banks increased to a record 6.49% in the second quarter from 5.58% in the first quarter, the Federal Reserve announced Monday. So let me see if I get this right. At 5% of non-performing loans a bank is at risk of being insolvent. But the entire banking system in The United States had its non-performing loan ratio increase from 5.58% in the first quarter to 6.49% in the second, a record, and higher than the 5% level at which the survival of a bank(ing system) is threatened with collapse. Hmmmm.... So should we take from this that the entire US Banking System is about to collapse?
