Dawn of the dead banks

By Paul R. La Monica, CNNMoney
2009-2-18 11:55:21

NEW YORK (CNNMoney.com) -- They walk among us. And they're a heck of a lot scarier than anything George A. Romero ever imagined.

ZOMBIE BANKS!

The term refers to banks that continue to survive, but only because of government funding. In other words, they have not been sufficiently restructured to allow them to actually get healthy and contribute to economic growth. This was a problem during Japan's so-called "lost decade" in the 1990s.

Now some are worrying that big banks on TARP support such as Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500), as well as smaller regional banks like Cincinnati-based Fifth Third (FITB, Fortune 500), are among the living dead.

"The use of the capital defines zombie status. When banks cannot use it for more than stabilizing their own condition, they are zombies. That's what you get when you give capital to insolvent institutions," said Joseph R. Mason, chaired professor of banking at Louisiana State University.

	Investment Basic Investment Overview Investment Approache Fundamentals Data Investment Stories www.fxj108.com	Dawn of the dead banks By Paul R. La Monica, CNNMoney 2009-2-18 11:55:21 NEW YORK (CNNMoney.com) -- They walk among us. And they're a heck of a lot scarier than anything George A. Romero ever imagined. ZOMBIE BANKS! The term refers to banks that continue to survive, but only because of government funding. In other words, they have not been sufficiently restructured to allow them to actually get healthy and contribute to economic growth. This was a problem during Japan's so-called "lost decade" in the 1990s. Now some are worrying that big banks on TARP support such as Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500), as well as smaller regional banks like Cincinnati-based Fifth Third (FITB, Fortune 500), are among the living dead. "The use of the capital defines zombie status. When banks cannot use it for more than stabilizing their own condition, they are zombies. That's what you get when you give capital to insolvent institutions," said Joseph R. Mason, chaired professor of banking at Louisiana State University.