1. Economy

    Market Bodes Badly for U.S. Banks

    PASADENA, CA - JULY 28:  A man uses an ATM at a Bank of America branch on July 28, 2009 in Pasadena, California. A bank spokesperson announced plans to close about 10 percent of its branchesf which will reduce its US network of 6,109-branches over the next three to five years, eliminating thousands of bank jobs, as customers do more online and telephone banking. The move reverses years of expansion by the nationÕs largest bank which faces growing losses from credit card and mortgage loans.  (Photo by David McNew/Getty Images)

    David McNew / Getty Images

    Scary times are here again: U.S. banks are once again living in fear, with Monday’s beating in the market—their shares plunged 11 percent—just the latest bad news. While few people expect a repeat of 2008’s Lehman debacle, banks are still sitting on huge portfolios of home loans, and a potential recession could lead to fresh losses on these assets. Bank of America, for example, controls one-fifth of the country’s home loan market, valued at $1 trillion. Its share value fell 20 percent Monday after the U.S. credit downgrade and AIG filed a $10 billion lawsuit against it alleging a “massive fraud.”

    Read it at Reuters Breakingviews