They key to whether it is working is not the price of banking stocks or the stock market in general. The key is are banks lending. Once banks start lending, real estate prices will stablizes, homes will start being built again, and cars will start selling. And banks are starting to ease credit and make it available to more and more people. Banks were not looking at people with credit score below 720 a few weeks back, now some are looking at people with 680 or better. We still have months to go before we see positive growth, but we are headed in the right direction.
The reason for the stock tankage is that they need more government money to keep them afloat due to rising bad loans (Citi lost over $8 billion last quarter and BAC/MER combined lost over $17 billion). The two in this case are directly correlated. I have yet to see any signs of credit expansion. Even if it did start to expand slightly in several months—have you seen the looming Option Arm & Alt A reset chart? Those are going to default at a much higher rate than the ‘subprime’ as most people’s payment goes up by 50-100% even if the rate stays the same on reset.
No, banks are not picking up their lending. Where are you getting that idea from??? The banks AREN’T lending more. I’ll need some definitive proof if I’m going to believe your seemingly erroneous assertion.
http://www.federalreserve.gov/releases/h8/Current/
http://www.turkishweekly.net/news/63368/us-bank-crisis-deepens-as-ecb-rate-cut-expected.html
“The large banks in the U.S. are not lending, and they’re desperate to conserve capital,” said Dan Alpert at Westwood Capital in New York. “Banks only remain going concerns because the federal government is topping up their equity.”
http://seekingalpha.com/article/113237-banks-lending-and-the-economy
“Right now, the commercial banks are not lending, and there doesn’t seem to be much reason to believe that they will pick up their lending any time soon. “
http://www.euractiv.com/en/BreakingNews?GUID=TRE50220O&_xsl=Article
“The BBC and The Times newspaper both reported on Saturday that the government was considering a second bailout because measures taken so far had failed to get banks lending again.”
http://www.freerepublic.com/perl/post
“S&P: Bank lending to slow “dramatically” in 2009 in Latin America”
I could go on for weeks posting these articles.