Billionaire investor Wilbur Ross says that medium-sized banks may be the next economic bubble to burst. Billionaire: Several U.S. Banks May Soon Go BustBy Cliff Montgomery – Mar. 10th, 2008Billionaire investor Wilbur Ross said today that America’s current slide toward economic depression is different than previous crashes, in that no U.S. banks have yet gone under. But he feels that may soon change.”I think that’s going to be the next wave and–coupled with problems in the commercial real estate market–I think they’ll be the next bubbles that burst,” declared the chairman/CEO of W. L. Ross and Company on CNBC‘s “Squawk Box” during an exclusive interview.He then was asked point-blank if that meant big banks soon would be in jeopardy.”I think that the big banks won’t fail in the sense that they will go to zero and depositors would lose money, [because] I think the Fed and other regulators will make things happen,” said Ross.”I think it’s the medium-sized banks [that will be in trouble], and particularly some of those that got overextended with the subprime and other kind of mortgage debt. I think those are the ones that had the serious mismatch, making 20- and 30-year loans based on 90-day deposits,” he added.He appears not to have mentioned the “elephant in the living room,” something most other Americans know to be a certain truth: That when those at the bottom of the economic ladder are working harder and harder but making less and ever less, numerous bankruptcies and foreclosures are inevitable. And when those huge economic contractions finally occur, it is equally inevitable that they will soon destroy everyone else’s financial future as well.Ross’ views are reminding many of those recently expressed by Federal Reserve Chairman Ben Bernanke, who stated at a Feb. 28th Senate committee hearing that a number of regional banks with heavy investments in real estate may shut their doors.Regardless, Ross told CNBC interviewers that the American economy probably won’t get back its luster any time soon.”I think at best we’re in for stagflation,” Ross stated, pointing out that America now suffers from a nasty combination of weak economic growth and higher inflation.”I think the consumer has been tapped out for quite a while, and is frightened by the poverty effect of seeing the house go down,” he added.Like what you’re reading so far? Then why not order a full year (52 issues) of thee-newsletter for only $15? A major article covering an story not being told in the Corporate Press will be delivered to your email every Monday morning for a full year, for less than 30 cents an issue. Order Now!
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