Video - Soros tells Bloomberg and Retuers today that the "US banking sytem is effectively insolvent" and that new "mark-to-market accounting rules keep zombie banks alive."
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These are flashback clips to last year, but absolutely nothing has changed about the banking sector.
From Bloomberg:
Billionaire George Soros said the change to fair-value accounting rules will keep troubled banks in business, stalling a recovery of the U.S. economy.
“This is part of the muddling through scenario where we are going to keep zombie banks alive,” Soros, 78, said today in an interview with Bloomberg Television. “It’s going to sap the energies of the economy.”
The Financial Accounting Standards Board last week relaxed so-called mark-to-market rules, allowing banks to use “significant” judgment in gauging prices of some investments on their books. While analysts said the measure may reduce writedowns and boost net income, investor advocates and accounting-industry groups said it will help financial institutions hide their true health.
Soros said that banking system is “seriously under water” with banks on “life support.” U.S. stocks fell for the first time in five days today on concern that government measures to shore up banks may not help as much as expected and loan losses will exceed levels from the Great Depression.
“They are weighed down by a lot of bad assets, which are still declining in value,” he said. “The amount is difficult to estimate, but I think it’s in the region of maybe a trillion- and-a-half dollars.”
Soros said there is a risk the U.S. economy will fall into a depression if nations don’t act collectively to solve the economic crisis.
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