Also it confirms that the Banks are indeed insolvent and compounds all discussed in this article of last Friday:
NEW YORK (Reuters) - Nouriel Roubini, one of the few economists who foretold much of the current financial turmoil, on Friday said the United States is nowhere near the end of the banking and credit crisis.
"We are still in the third and fourth innings," Roubini told Reuters in an interview, using a baseball analogy to drive home his view that the current cycle is only nearing its midpoint.
"And it's getting worse," said Roubini, a professor at New York University's Stern School of Business and chairman of RGE Monitor, an independent economic research firm.
On February 10, U.S. Treasury Secretary Timothy Geithner unveiled his newest bailout plan for banks, including the government's so-called "stress tests" involving all banks with more than $100 billion in capital. Regulators will analyze the banks' books far more closely than previously to see if they have the capital to endure worsening conditions.
"It is the step to form an objective way to decide which banks are illiquid and which ones are insolvent and to take over the insolvent bank," Roubini said. "We have to take over some banks."
Bank of America Corp (BAC.N) and Citigroup Inc (C.N) shares plummeted for a sixth straight day on Friday, hammered by fears that the U.S. government could nationalize the banks, wiping out shareholders.
Nationalization or receivership of a bank need not be a permanent issue, Roubini added.
"I think of it being a temporary measure -- take them over and clean them up and sell them back to the private sector," Roubini said. "No one is in favor of long-term government ownership of the banking system."
For example, IndyMac was bankrupt and taken over in July. "Less than six months later the very same group of private investors was willing to buy back the assets and the deposits," he said.
"So it doesn't have to be under government control for years and years. You can do it actually relatively quickly."
All told, Roubini said he sees negative economic growth throughout 2009, predicting that the unemployment rate could reach roughly 10 percent in the next year.
(Editing by Dan Grebler)
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