Why Your Bank Is Broke

Sketch loans, financial blunders and a string of bad bets have left America's banks nearly insolvent. How an industry collapsed — and why only nationalization might solve it

JB Reed / Bloomberg News / Landov

Paul Havard talks on his cell phone inside a Citibank branch in New York on Jan. 16, 2009

Even without doing the math, you probably get that the government's financial-rescue effort is failing. The signs are hard to miss. Your friend in finance got pink-slipped. A house sale down the street fell through because the buyer couldn't get a mortgage. A local bank is closing a nearby branch or maybe shutting down altogether.

But do the math, and you can begin to understand how really botched this bailout has been. Since October, the government has deposited $165 billion into the accounts of the nation's eight largest banks . Yet those same financial firms...

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