And then we read, in today's Post for example, that unexpectedly large bank losses are complicating the federal government's rescue plans. As they note:
The problems are intensifying the pressure on the incoming Obama administration to allocate more of the $700 billion rescue program to financial firms even as Democratic leaders have urged more help for distressed homeowners, small businesses and municipalities. Senior Federal Reserve officials said this week that the bulk of the money should go to banks.This should hardly be a surprise. Given the massive de-leveraging we are experiencing, and the fact that a new wave of foreclosures are coming. Moreover, it is not clear that all of the troubled banks have recognized their losses yet. Under these conditions would you lend?