Some large American banks are on the verge of insolvency and would require a more direct government role than the plan outlined this week, a media report said today.
A sober assessment of the growing mountain of losses from bad bets, measured in today's marketplace, would overwhelm the value of the banks' assets, financial experts were quoted by the New York Times as saying.
None of the experts' research focuses on individual bank, and there are certainly exceptions among the 50 largest banks in the country, the newspaper said.
"Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves," it said.
But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce, the newspaper said, quoting economists and experts as saying the answer is a larger, more direct government role than in the Treasury Department's plan outlined this week.