they are digging their own grave, they will make the recession worse and their loans losses bigger http://www.bloomberg.com/apps/news?pid=20601087&sid=aY8Mbv9oNHzw&refer=home http://www.federalreserve.gov/boarddocs/snloansurvey/200808/charts.pdf
Not really: they're just hanging on for dear life. Remember that the federales say there's 150 banks on the verge of collapse but an independent analysis says more like 750 which is half of the banks of the SnL crisis.
Isn't it already obvious. The credit squeeze is causing the housing prices to fall, when they finally decide house prices are at a good value, credit will expand again, and all will be well in the world.
but a lot of banks dont realize that their own solvency depends on their lending. thats a point raised by soros that I think its a excellent one. there is no end on sight because this is a self reinforcing trend, the more homes fall the more they lose and they more they need to cut on lending, increasing unemployment and so on. losses will be huge, financials have bottomed my ass
Its prisoners dilemmia. Each bank is acting in their own best interest (recapitalize by high spreads). Yes, this slows borrowing and RE expenditure. They know that. But one bank lending on a tight spread will not change the groups larger decision to not. So none do. Hence, a "Credit crisis" .