Hard Lessons of '80s Left Banks Tougher
NEW YORK -- U.S. bankers have blown it again. They lost millions in Russian Treasury bills. They got creamed on Asian securities. They loaned too much to hedge funds. They're at risk -- again -- in Latin America.</br></br>When will they learn?</br></br>In fact, bankers have learned a lot this decade. While their earnings may be bruised and their growth prospects may be slowing, the nation's banks are in far better shape today than they were the last time the economy showed signs of slowing down. That will almost surely mean a softer landing when the next recession strikes.</br></br>It was less than a decade ago that U.S. banks seemed mired in their worst crisis since the Great Depression. Big international banks lost hundreds of millions in real-estate and Latin American loans during the 1980s. Dozens of small banks failed in Texas and New England, deepening the recession in those places.</br></br>These days, U.S. banks are awash in capital. Indeed, the Securities and Exchange Commission even put heat recently on SunTrust Banks Inc. of Atlanta for stockpiling reserves to boost earnings during a slowdown.