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January 12, 2009 (LPAC)--Later this week, the banks will begin reporting their fourth quarter and full-year results for 2008, and the way the reports are crafted will prove interesting. Even in the phony accounting terms used by the banks, the bottom fell out of the financial system during the fourth quarter, so by all rights the banks should be reporting huge losses. At the same time, all the big banks got huge handouts from the Treasury's TARP scheme, which they should use to write down some of the losses we all know are sitting on their books. Therefore, what the banks should do, is to use the TARP funds as an opportunity to write off significant amounts of their bad assets; we should see the big banks report losses in the tens of billions of dollars each.

That doesn't mean that the banks actually will report such losses, but everyone should realize that if they don't, it means they are too bankrupt to take even that relatively small step. So, if the big losses are scary, the lack of such reports is even scarier--and even big losses should be seen as a cover-up. If the banks actually told the truth, they'd have to shut their doors.