I hate to quote the New York Post. I really do. But this guy makes a good point….

IF you think banks have trouble now, just wait until they report financial results in January.

That’s when the balance sheet will really hit the fan.

The problem involves a rule passed a couple of years ago that will put the banking industry’s outside auditors in peril if they sign off on results that they really can’t verify.

The problem involves a rule passed a couple of years ago that will put the banking industry’s outside auditors in peril if they sign off on results that they really can’t verify.

And right now there is nothing verifiable – or even understandable – about the banking industry’s exposure to derivatives.

The auditors’ dilemma was caused by a rule change that now prohibits banks from indemnifying auditors against mistakes.

Why does this matter? Because the banks themselves obviously are not that sure about the value of the assets on their books. Given their uncertainty, they have chosen to err on the wildly optimistic side. But give that the auditors are going to be liable for any errors in the accounts, it is doubtful they will go easy on the banks. So beginning of next year might be a moment of truth.

And just to remind people of what we have pointed out before, we point you to this story from Newsmax….

Think the estimated subprime debt load carried by the big international banks is big, at $1 trillion?

How about this: Americans now owe nearly as much – a record $915 billion – on their credit cards alone.

And defaults and delinquencies in the credit card sector are piling up – which means big banks are on the hook, again. More sand in the gears for the global economy.