While I am far from knowledgeable about the intricacies of the financials market, I do follow the news and blogosphere regarding financials and their entanglements in the real estate driven credit crunch mess we are in. The news in recent weeks is pretty scary, and it is obvious that some people way up the food chain are scrambling furiously to contain something that the industry wants to desperately keep under wraps.

After an abysmal week of Q3 earnings reports from big banks including Washington Mutual, Citibank and Wachovia, there’s been a lot of media fanfare surrounding the Citi-led, treasury sponsored M-LEC bailout plan. Please take a moment to read Mish’s analysis of the plan’s similarities to Enron’s infamous practice of hiding losses off the books.

These developments follow hot on the heels of the collapse of one of the oldest Internet Banks, NetBank, the bulk of whom’s 2.3 billion in deposits was purchased by another IB, ING Direct.

Could the banking industry losses be the real motivation behind the obvious market manipulation of recent months? Something bigger than the collapse of the housing bubble is now brewing in the U.S. economy. Banking industry default is about as scary a prospect as I can imagine, and I’d wager that the Fed would agree.

 

Tags: Banking, Financials, Housing, Credit+Crunch, PPT, JP+Oliva

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