With bad loans tripling and leveraged loans looming, banks need $1 trillion in new capital

It sure is hard to be a banker these days. It used to be that all a banker had to do to get millions in bonuses was to close some big deals and at the end of the year, the bonus cash would roll in. Every ten years or so, bankers are reminded that it's easy to lend out money and hard to get it paid back -- particularly when a recession puts the kibosh on cash flow for everyone at the same time.

Why this musing on the woes of banking in a recession? Before answering this, I must apologize for the string of acronyms I am about to unleash. Because today the 19 financial institutions (FIs) that the Treasury forced into what I think are bone-headed stress tests will find out the results.


The Latest from our Partners