Tom & all,
I'm just a layman without knowledge of financial markets, but IMHO.
US banks are the last place I would be investing right now. While they had minimal exposure to Asia, their exposure to Russia, Latin & South America, unsecured consumer loans, highly leveraged mortgage loans on over valued real estate, thinly secured corporate loans, and other loans (auto, brokerages, hedge funds, etc.) is too high for them avoid serious losses from a prolonged US recession.
Also - the '90s have been a time of mergers and acquisitions - based on stock value at the time. Many of these were financed acquisitions that will not provide the necessary funds to meet debt requirements as they were based on continuing economic expansion.
Look for an increase in NPLs in the US over the next two years resulting in a tightening of credit policy that will prompt more NPLs (Japan scenario).
Having condemned the Japanese for not letting banks fail, would the US follow it's own advice? Not yet saying it will get that serious, but I do think we are going to see a lot more bad news from US banks over the next 2-3 years.
JMHO,
Ron
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