George Soros says 'basically bankrupt' banks restrain U.S.

Financial companies in the Americas have written down or lost US$1.1 trillion since the financial crisis began two years ago, while the U.S. savings rate has risen to its highest in 24 years as consumers retrench. Soros signaled a stronger rebound in Europe, a view at odds with the IMF. The Washington-based lender last week said the U.S. economy will grow 1.5 percent next year, five times the pace of the euro area.

“Europe has been less damaged,” Soros said Monday. The European Central Bank may be faster than the Federal Reserve to start withdrawing stimulus, he said.

Policy makers may struggle to revamp the regulation of the financial system now that the economy and markets are recovering, he said. “It will be very difficult to accomplish,” he said. “The crash of 2008 now seems like a bad dream and people like to treat it like a bad dream and forget about it and get back to business as usual.”

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