One need not recite the history regarding the TARP and stimulus funds which went into saving the “too big to fail” banks and brokerage houses.  Now comes news that the big banks “earned” 2.8 billion in the third quarter.  Yet there are more banks on the “about to fail” list compiled by the FDIC.  “Banks earned $2.8 billion in the third quarter, but nearly 40 percent of that was from a one-time accounting trick. Loan balances plummeted and the fund that insures their deposits was $8.2 billion in the red.  The number of banks on the FDIC’s “problem list” rose to 552 from 416 on June 30, the highest level in 16 years. Fifty banks failed during the quarter _ the largest number since the second quarter of 1990.”  Here is a link: http://malaysia.news.yahoo.com/ap/20091125/twl-us-banks-earnings-ef375f8.html

In a related story, the amount of loans made by banks has continued to decline at record levels.  Remember when the TARP money was supposed to be used to get banks lending again?  This did not happen, instead the money went to allow banks to purchase smaller weaker institutions or to increase reserves.  “Loan balances at banks nationwide declined at a record pace in the third quarter of 2009.  The nation’s 8,099 banks ended the third quarter with $210.4 billion less in loans and leases on their books — a 2.8 percent decline. That percentage is the largest decline on record since banking regulators began tracking quarterly loan balances in 1984.  At Texas-based banks, loan balances declined even quicker — down 4.2 percent to $215.7 billion from $225.1 billion in the second quarter.” 

Here is a link: http://dallas.bizjournals.com/dallas/stories/2009/11/23/daily12.html

Michael