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Is the Bank Crisis Over?

In recent months, US bank shares have rebounded, and some banks have even succeeded in repaying at least part of their government-provided capital. But this may only be a temporary improvement in expectations rather than a sign of permanent recovery, as the size of the banks’ hidden losses on their balance sheets is probably enormous, with much of it yet to be written off.

MUNICH – As America’s various rescue plans take hold, stock markets are recovering somewhat. The S&P 500 price/earnings ratio is gradually climbing back to its long-term average of 16. Bank shares in particular are rebounding, and some banks have even succeeded in repaying at least part of their government-provided capital.

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