100 Banks on Government Watch List? Time for Tough Love?

Inside the Wall Street Journal today is an important story about the health of banks around the country. The Journal reports that 100 banks around the country are on a government watch list due to their financial well being. Furthermore, the the Journal says two government arms are at odds over whether there needs to be pressure put on them to get their balance sheets in order.

The first arm argues tough love now will mean less cost later in cleaning things up. The second arm apparently advocates a less "dire analysis" according to the Journal.

Here's why you care: The first arm is the Federal Deposit Insurance Corporation (FDIC) which was created in the wake of the depression and insures your checking account or savings account to the tune of $100,000 (ie, if the bank goes bust, the government will pay you up to $100,000). The second arm oversees savings-and-loans around the country (the Office of Thrift Supervision). If the folks that are insuring your checking account are concerned enough to advocate more pressure on banks to get their financial house in order, shouldn't you be concerned too?

That's why amidst all of the stories today about building starts being down, the Producer Price Index pointing to inflation and earning reports (which Why You Care outlined for you last Thursday), you should instead be reading this article.