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US 'may' back bank deposits as rescue system moves too slowly

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The federal government is considering backing all bank deposits and guaranteeing huge amount of bank dept. Depositors are withdrawing money from financial companies at an alarming rate.

According to The Wall Street Journal, "If the two moves come to fruition they would mark the government's most extensive intervention yet in the financial system."

"If" is a big problem. Many banks and brokerage stocks are selling off at the rate of 10% to 20% a day. Barclays (NYSE: BCS) opened down over 20% in London trading.

Governments are allowing the collapse of financial markets to get well out ahead of solutions. If that continues, confidence in the banking system could falter further and lending could be shut down completely.

If the Treasury and Fed do not act over the weekend, next week could be unspeakably tough.

Douglas A. McIntyre is an editor at 247wallst.com.

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Last updated: November 23, 2009: 06:24 AM

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