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US banking crisis far from over, Congress warns
Toxic assets on the balance sheets of hundreds of American banks remain a "substantial danger" to the financial system and could yet drive institutions to collapse, a congressional watchdog warned on Tuesday in a report urging against any complacency that the banking crisis may be drawing to a close.
A congressional oversight panel charged with scrutinizing the Treasury's $700 billion bailout efforts said smaller banks, which were not examined in recent government "stress tests", are at particular risk as the ongoing US recession pushes an increasing number of commercial property loans into default.
The panel warned that if unemployment remains high and the property market continues to crumble, banks will still incur further losses on bad assets: "The financial system will remain vulnerable to the crisis conditions that Tarp [the Treasury's bail-out program] was meant to fix."
Elizabeth Warren, the panel's chairman, said the underlying value of assets on banks' balance sheets remained uncertain, with many loans proving almost impossible to sell.