More bad news

Via Atrios,

Aug. 22 (Bloomberg) -- U.S. banks and thrifts suffered the biggest increase in late loan payments in 17 years as more homeowners fell behind on mortgages, the Federal Deposit Insurance Corp. said.

Loans more than 90 days past due rose 10.6 percent to $66.9 billion in the period ending June 30, the largest quarterly increase since 1990, the FDIC said in its Quarterly Banking Profile released today.

``The bottom line for banks is that the credit environment continues to be more challenging now than it has been in recent years,'' FDIC Chairman Sheila Bair said during a news briefing at the agency's Washington headquarters.

Just what we need right now. Despite what seems to be a constant stream of bad news, some are still optimistic because they think the Fed will bail out the market. I guess I'm seeing moral hazard playing itself out right now. I am still leaning towards those who believe the credit crunch we are seeing is an insolvency problem rather than just a liquidity crisis. The fed's attempts at a bail out won't work and will just delay the pain from the bubble burst ing.

And, mass layoffs in the financial industry doesn't help.

~BT

Update: Suburban Guerrilla covers the differing opinions and the latest lifeline from Bank of America to stabilize markets

Update 2: Knowledge@Wharton offers a more optimistic perspective on what's ahead for the markets.