Government's problems with banks may still be massive

The Wall Street Journal

has published an exclusive report looking at possible losses at small and medium-sized banks that could result from trouble in their real estate portfolios. The total of the red ink could hit $200 billion. That may leave the government holding another big bag of bank stock shares, if it decides, as it will, to prop these firms up.

According to the paper, "more than 600 small and midsize banks could see their capital shrink to levels that usually are considered worrisome by federal regulators." The paper used the same "stress test" measures to look at the smaller banks that the government used on larger ones.