Congressional Oversight Panel (August 2009)on the current stability of the United States financial system
“In the run-up to the financial crisis, banks and other lenders made millions of loans tohomeowners across America, expecting that their money would eventually be paid back. ...“They are no longer expected to be paid off in full, and they are very difficult to sell. There isno doubt that the banks holding these assets expect substantial losses, but the scale of thoselosses is far from clear. …“If the economy worsens, especially if unemployment remains elevated or if the commercialreal estate market collapses, then defaults will rise and the troubled assets will continue todeteriorate in value. Banks will incur further losses on their troubled assets.
The financialsystem will remain vulnerable to the crisis conditions that TARP [the Troubled Asset Relief Program] was meant to fix.
SINCE THE FINANCIAL SYSTEM REMAINS“VULNERABLE” IF ANYTHING GOES WRONG WITHTHE ECONOMY (SUCH AS A DOUBLE-DIPRECESSION), IT IS VITAL TO UNDERSTAND WHATWERE “THE CRISIS CONDITIONS THAT TARP WASMEANT TO FIX.”THAT VULNERABILITY, ACCORDING TO THEAUTHORITIES QUOTED BELOW, IS “LITERALLY AMELTDOWN OF THE FINANCIAL SYSTEM”.
Sen. Chris Dodd (D) of Connecticutinterviewed by Mike Barnicle (September 2008)
"I can‘t even begin to describe to you adequately the mood last evening with the leadership of the House, the Senate, Democrats and Republicans, in a meeting with Ben Bernanke, thechairman of the Federal Reserve, and Hank Paulson, the secretary of the Treasury, [SECChairman] Chris Cox, when they described what situation we‘re in not only here but globally. And if we fail to act in the coming days, the consequences for us here at home, as well asaround the world — pension funds, 401(k)s, mutual funds, jobs, literally a meltdown of thefinancial system. …"I think — they said, Look, I mean, this is — we‘re at a moment here, not a matter of weeksaway or months away or years away, we‘re a matter of hours or days away from the largestcollapse of the financial markets in the history of this country, and the effect would be a globaleffect. And this was a very sobering moment. I‘ve listened to a lot of very important moments