Neel Kashkari was on CNBC this morning talking about the wild (beyond his dreams) success of TARP.
Hopefully this wasn’t some kind of mission-accomplished moment, because suddenly more and more folks are talking about the potential need for a second bank bailout.
Perhaps it’s the ructions in Ireland reminding folks that just because you’ve addressed your problems, it doesn’t mean you won’t have to address them again and again and again.
Chris Whalen of Institutional Risk Analytics recently predicted another bank bailout saying receivership and more support would be needed for basically all major banks.
And in the UK, the New Economics Foundation think tank has predicted a major funding gap coming, and thus more bank bailouts to come.
Warning of a potential “funding cliff” next year, Nef quoted the Bank of England’s Inflation Report last month, which said: “UK banks continue to face a number of challenges related in particular to their need to refinance substantial levels of maturing funding.”
Although the think-tank conceded it was difficult to estimate the extent of any funding shortfall, it predicted the banks would need an extra £13 billion a month in 2011, equivalent to £156 billion a year – £2,500 for every man, woman and child in the UK.
Co-authors Andrew Simms and Tony Greenham wrote: “Let us be clear. In order to support a banking system that is in aggregate withdrawing lending from the private sector, UK banks currently have to borrow £12bn a month. In 2011, they will have to borrow an additional £13bn a month.
From their report, titled “Where Did Our Money Go?” here’s the chart that would suggest the UK is another Ireland or Iceland, with the potential to meltdown if in fact that worth fears of the banking system are realised.
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