As reported in today’s WSJ Real Time Economics blog, the Federal Reserve believes that the financial sector has yet to hit bottom.
The Federal Reserve released its beige book report today on regional economic conditions, and the news continues to be grim as broad weakness was recorded throughout the country. The financial sector remains in particularly bad shape.
The New York Fed reported that “a contact monitoring the financial sector maintains that the industry is still far from hitting bottom.” As the failure of Lehman Brothers continues to work its way through the industry, and Citigroup stands on the precipice of being split up, there appears to be more pain to come.
Bernanke certainly hinted strongly at this in his recent speech to the London School of Economics.