Skip navigation
Bailout Gallery
GM is planning to draw down more of the $30 billion in bailout funds committed to it by the Treasury, with CNBC's Phil L...
JPMorgan CEO Jamie Dimon discusses the economy, the bailout and systemic risk with PBS talk show host, Charlie Rose, and...
JPMorgan CEO Jamie Dimon discusses the economy, the bailout and systemic risk with PBS talk show host, Charlie Rose.
Insight on the bonus backlash, with Julie Roginsky, Democratic Strategist; Robert Miller, Carnegie Mellon Tepper School ...
Discussing whether the FHA is going broke, with John Carney, BusinessInsider.com and CNBC's Larry Kudlow.


Current DateTime: 02:55:05 09 Nov 2009
LinksList Documentid: 33482595

Current DateTime: 02:55:06 09 Nov 2009
LinksList Documentid: 24355697

FEATURED QUIZZES


Current DateTime: 02:55:06 09 Nov 2009
LinksList Documentid: 33793611

Current DateTime: 02:55:06 09 Nov 2009
LinksList Documentid: 24890560
  • Winterizing Your Portfolio

      If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.

  • Investor's Guide to Real Estate

      Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.

  • Alternative Investing

      Stocks and bonds? Sure. But it's a big world out there for investors.

powered by digg
Banking System Will Need Another $500 Billion: Gross
By: CNBC.com | 25 Sep 2008 | 09:43 AM ET
Text Size

Bill Gross
Bill Gross

The banking system needs another $500 billion to survive beyond the $700 billion rescue plan being contemplated by Congress, said Pimco founder Bill Gross.

Gross said on CNBC that the government bailout plan will help free up bank balance sheets so they can start lending again, but will provide only about $50 billion in real capital to the system.

"The plan goes far but it doesn't go far enough in terms of recapitalization," he said. "The banking system and the investment banking system in total really requires about $500 billion more. Where that comes from is still up in the air."

The Federal Reserve will need to step in to quell fears of counterparty risk—the worry that one partner in a deal won't hold up its end--and provide assurance that it will be a clearinghouse to make sure transactions get done, Gross said.

"There's a lack of trust anywhere in terms of other counterparties," he said. "The Fed to a certain extent has to assume this level of counterparty risk. It has to be a clearinghouse. Otherwise things don't get done."

(Watch the accompanying video for the full interview with Bill Gross...)

On the economy, he predicted tough sledding in 2009, with an unemployment rate of 7 percent that he called "not tragic but certainly not good for the millions of Americans who are going to be out of jobs."

Gross supports the bailout proposal but said the government will find itself with more work to do.

"We're all in favor of this program," he said. "We've advocated it. To suggest otherwise is something I shouldn't do, but I think there are additional steps that need to be taken down the road."

© 2009 CNBC.com
Tools:
Print EmailAdd This share icon
  • digg share

CNBC HIGHLIGHTS

  • Do free market libertarians really believe what they say about ethics and shareholder value? The Big Money takes a look.
  • Jim Cramer
  • Cramer did the research and found eight stocks that lead the pack. Read on to get his top picks.
  • On the anniversary of the fall of the Berlin Wall, many in the former Eastern Bloc recall communism fondly.
  • Gavel
  • Software, biotech firms, even banks are watching a particular Supreme Court argument today.
  • From politicians to CEOs to companies, here's your chance to vote for the winners and losers of 2009.
  • A new sinister Internet viruses can turn you into an unsuspecting collector of child pornography.
ADD COMMENTS
Remaining characters


Current DateTime: 01:37:41 09 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 08:52:06 09 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 12:21:54 09 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 08:52:07 09 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters