World must brace itslef as the US banking sector 'fesses up' to losses

London Telegraph

by: Liam Halliagan

"Over the coming months, US banks will have to increase their loan loss provisions even more - which, of course, will further depress their share prices and ability to raise new capital. That's why a major banking crisis is brewing.

I don't say this lightly, but up to 100 US banks could go bust over the coming year. Many of them will be small, but some could be large. Last week, Harvard Professor Ken Rogoff, a former IMF chief economist and Fed insider, said "we're going to see a whopper, a really big one" - suggesting a big US bank is about to go belly-up. Conventional wisdom has it that America's well developed system of deposit insurance will shield savers from any losses. But the Federal Deposit Insurance Corporation has assets of only $50bn, while the combined assets of the banks in danger total around $900bn."