CHART OF THE DAY: American Banks On Thin Ice
ALLL = Allowance for Loan and Lease Losses
Only one in five banks has set aside enough money to cover the loans that are not being repaid. This is independent of problems in CDOs, which may be full of nonperforming loans, carried on the books as performing assets. The latter problem is more important for the larger banks. This graph illustrates a problem for the more numerous smaller banks. But what will happen as a result of smaller bank failures? The larger banks will control a larger portion of the market, increasing systemic risk. DOOM!
