Banks are not to be trusted

This is not just the view of the public and policymakers, but that of the banks themselves. - FT.com

clipped from www.ft.com Market stress has evidently reached frightening levels. If lenders demand huge spreads for such short periods, they are either tightly constrained in their ability to lend, deeply concerned about the solvency of counterparties, or engaged in predatory behaviour. Whichever of these possibilities is true, credit to the economy will dry up. If banks do not trust banks, what do they trust? The answer is: only the government. This dire situation makes decisive action essential. Beyond doubt, failure by the US Congress to pass a rescue package would court catastrophe. Banks unable to borrow are zombies. They must be restored to health or allowed to perish quietly.