US banking sector unlikely to rebound soon
Saturday, 29 August 2009
From Fazle Rashid
NEW YORK, August 28: The grim news is the US banks lost $3.7 billion in the second quarter more than earlier estimated. The amusing news is Britain has levied a value added tax (VAT) of pound sterling 50 million on new American embassy complex in London.
The loss, the US banks suffered, is due to surge in bad loans to real estate businesses. The deposit insurance fund of the Federal Deposit Insurance Corporation (FDIC) has dropped to $10.4 billion, lowest in 16 years, the New York Times (NYT) reported today. In a warning that would confound many, the FDIC said, economy and financial markets have shown signs of growth but banking sector is unlikely to rebound soon. Cleaning up balance sheets is a painful process that does take time but it is absolutely necessary to industry's sustained profitability. So far 81 banks have been closed down..
Most of America's 8195 banks make their money through lending to consumers and businesses. These banks are now under pressure from soaring bad loans and higher deposit insurance cost.
America's gross domestic product (gdp) has shrunk by 1.0 per cent, true to forecast made earlier. Businesses cut inventories by $159 billion in the second quarter as they race to cut cost and reduce stockpiles. Credit card and identity thefts are rising abnormally. The latest victims are no other persons that US Fed Chairman Ben Bernanke and his wife. Mrs Bernanke personal wallet was stolen from coffee shop Star Bucks located on the Capitol Hill. It contained her social security card, cheque books and identification, NYT reported using a wire service story.
Meanwhile, the policy planners and business managers in Britain are grappling with the question of imposing tax on all financial transactions to deter excessive risk taking and future crises. The finance ministers of Group of Twenty (G20) nations will gather in London next week and compensations of bankers will dominate the their discussions. British Bankers association promptly rejected the notion saying such a tax would harm London's position as the global financial centre.
And Britain is said to be firm on its decision to levy a tax of pound sterling 50 million on the new US embassy complex. The planned move is to shift from Grosvenor Square to less fashionable Vauxhall on the south bank of River Thames by 2016. The US has added 68 properties all over the world without paying any taxes. The US embassy in London is in talk with Britain over payment of VAT
And on the political and diplomatic front, Richard Halbrooke, US special envoy to Pakistan and Afghanistan met with Hamid Karzai to make it clear to him US position on recent presidential election which has been tarnished by the allegations of widespread abuses and irregularities.
China in the meanwhile has urged the US to halt surveillance missions near its coast as Beijing indicated that it would no longer tolerate American dominance indefinitely in an area it views as its strategic sphere of influence.
NEW YORK, August 28: The grim news is the US banks lost $3.7 billion in the second quarter more than earlier estimated. The amusing news is Britain has levied a value added tax (VAT) of pound sterling 50 million on new American embassy complex in London.
The loss, the US banks suffered, is due to surge in bad loans to real estate businesses. The deposit insurance fund of the Federal Deposit Insurance Corporation (FDIC) has dropped to $10.4 billion, lowest in 16 years, the New York Times (NYT) reported today. In a warning that would confound many, the FDIC said, economy and financial markets have shown signs of growth but banking sector is unlikely to rebound soon. Cleaning up balance sheets is a painful process that does take time but it is absolutely necessary to industry's sustained profitability. So far 81 banks have been closed down..
Most of America's 8195 banks make their money through lending to consumers and businesses. These banks are now under pressure from soaring bad loans and higher deposit insurance cost.
America's gross domestic product (gdp) has shrunk by 1.0 per cent, true to forecast made earlier. Businesses cut inventories by $159 billion in the second quarter as they race to cut cost and reduce stockpiles. Credit card and identity thefts are rising abnormally. The latest victims are no other persons that US Fed Chairman Ben Bernanke and his wife. Mrs Bernanke personal wallet was stolen from coffee shop Star Bucks located on the Capitol Hill. It contained her social security card, cheque books and identification, NYT reported using a wire service story.
Meanwhile, the policy planners and business managers in Britain are grappling with the question of imposing tax on all financial transactions to deter excessive risk taking and future crises. The finance ministers of Group of Twenty (G20) nations will gather in London next week and compensations of bankers will dominate the their discussions. British Bankers association promptly rejected the notion saying such a tax would harm London's position as the global financial centre.
And Britain is said to be firm on its decision to levy a tax of pound sterling 50 million on the new US embassy complex. The planned move is to shift from Grosvenor Square to less fashionable Vauxhall on the south bank of River Thames by 2016. The US has added 68 properties all over the world without paying any taxes. The US embassy in London is in talk with Britain over payment of VAT
And on the political and diplomatic front, Richard Halbrooke, US special envoy to Pakistan and Afghanistan met with Hamid Karzai to make it clear to him US position on recent presidential election which has been tarnished by the allegations of widespread abuses and irregularities.
China in the meanwhile has urged the US to halt surveillance missions near its coast as Beijing indicated that it would no longer tolerate American dominance indefinitely in an area it views as its strategic sphere of influence.