More Bank Risk...

...To come in the near future.

http://www.reuters.com/article/idUSTRE60R6O120100128

This is a follow up from my post earlier this month.

http://www.blogger.com/post-edit.g?blogID=4463110685046824170&postID=2924560827242071556

The banks have suckered the masses into thinking that they are no longer under the umbrella of the government and tax payer.

There is over $300B in TLGP backed debt that is maturing in 2012. This debt needs to be refinanced, and without the implicit government guarantee, the borrowing costs will be higher.

Banks are currently borrowing at around 0.7%. Once the refinance comes around in 2012, the borrowing cost will be right around 4.7%. Why would banks borrow at that rate and lend at 5-6%?

Or they can just bypass this type of funding and just start to borrow more from the overnight markets or CP Market. Ahhhh....back to the good all days of Lehman and Bear Stearns's.

If you think bank lending is bad now, just wait till 2012.