US bank stocks are off sharply this morning on bad news from the UK, particularly that it has taken a 70% interest in huge financial firm RBS (RBS).
Banks may have another reason to sell off. Famous economist Nouriel Roubini says that “I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers. If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis," according to Bloomberg.
Douglas A. McIntyre