Economic Horror Flick: Zombie Banks

by Jordan Yerman | February 18, 2009 at 10:55 am

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We know that foreclosures and layoffs can turn your town into a ghost town, but zombies? grab your chainsaw, because zombie banks are back!

A zombie bank is a financial institution which receives government bailout money but does not in turn lend that money out to the public. It should be dead, but is living an unnatural unlife... and giving off the stench of zombification.

The Market Oracle lists Bank of America and Citigroup as zombies.

Zombification can strike companies, too... just look at Chrysler and GM.

A zombie bank keeps draining bailout capital from the government but doesn't respond with any meaningful lending that helps the economy recover.

They aren’t really alive, having inflicted fatal injuries to themselves, but they refuse to die. “Zombie banks eat the fabric of the economy,” analyst Andy Kessler tells National Public Radio. “You gotta shoot ‘em, you gotta get rid of ‘em, cut their heads off, put the silver bullet through their heart and get some healthy banks.”

I think that "vampire banks" would be more apt, since these banks don't beget similar banks, but suck from the newly-introduced cash vein.

You've got red on you.