February 28, 2009

This is the first time since the fourth quarter of 1990 that the industry has posted an aggregate net loss for a quarter. It's been 17 years since we've seen the banking industry this sick. In addition, return on assets hasn't been this low in 20 years. What caused the last set of problems? The savings and loan crisis.

High expenses for loan-loss provisions, sizable losses in trading accounts, and large writedowns of goodwill and other assets all contributed to the industry's net loss. This represents a double whammy for banks. Not only are their assets decreasing in value, so are their loans. That means they're getting hit from both ends.