No Zombie Banks, Just Payday Loans For Living

Payday loans for reanimated banks?

Payday loans are for living. Zombie banks are mythological husks of a dying economy… right?

Greg Robb of MarketWatch reports that Ben Bernanke and the Federal Reserve are denying that the government has seized control of any banks, or that this will ever be necessary. There is no such thing as “zombie banks,” he says. The term “zombie” as it applies to banks, says Robb, indicates that a bank still exists but is only alive because the government has taken complete control.

“That is not an accurate description” for top U.S. banks now, says Bernanke. “They all have substantial franchise value. They are all lending — all active. All have substantial international franchises.” In particular, Bernanke objects to zombie terminology. Perhaps because it implies there no control over the institutions. They lumber along, much like a spastic denizen of the walking dead - with the prerequisite motor skills of a lump of Jello.

Pumping up dead profit margins

Just how damaged American banks are right now is uncertain, as rumors of mounds of toxic “off-book” debt won’t go away. Things still look grim, despite the fact that Presidents Bush and Obama have signed off on pumping billions into them for “partial” ownership stake. There may be much more pumping up to come. How much is anyone’s guess. A loan until payday, anyone?

As always, the idea of nationalization is avoided like so much necrotic tissue. Bernanke insists it would do more harm than good,  “destroying the franchise value and creating high legal uncertainty.” He believes the Fed has enough supervisory oversight to get banks to do what the government wants to create profit. ... click here to read the rest of the article titled "No Zombie Banks, Just Payday Loans For Living"