So far, they have written off more than $350 billion in loans. Many experts now predict the toll will rise to $1 trillion or more; a staggering sum that could cripple many institutions for years.
Many had assumed the worst was over. But, this month, the open distress of Fannie Mae and Freddie Mac two huge, government sponsored institutions that together own or guarantee nearly half of the nation's $12 trillion in outstanding mortgages sent a signal that more ugly surprises may lie in wait.
To calm markets, the government last weekend hurriedly put together a rescue package for Fannie and Freddie that, if used, could cost as much as $300 billion dollars.
Economic slowdowns always mean job losses.
Unemployment already has risen, and almost certainly will increase more. Over the last six months, the economy has shed 485,000 private sector jobs, according to the Labor Department. The unemployment rate still remains low by historical standards, at 5.7%.
With job losses of 65,000 a month, this year does not approach the magnitude of those seen in past downturns, particularly the twin recessions at the beginning of the 1980s, when the economy shed upward of 140,000 jobs a month and the unemployment rate exceeded 10%.
Goldman Sachs economic advisors predict unemployment will reach 6.5% by the end of 2009.
