"There's no question that more banks will fail. We're halfway through 2008 and about five banks have failed nationally. They did a study about 15 years ago during the last recession, showing that the rates of banks closing was a much higher number than what we see now. We're in pretty good shape compared to the 1992-1994 time frame, but certainly more banks will go out. Even in the best of times you have certain banks that make bad decisions and go out. The numbers don't surprise me at all.

"The smaller regional banks seem to have made mistakes buying all kinds of investments that were illiquid, mortgage-based securities, etc. I don't think it's the subprime that's killing these banks. It was investing in other things where they didn't know what they were buying: CMBS pieces and commercial loans that turned bad. A couple big commercial loans can really wipe out a smaller bank. We may see one of the big guys go down. There could be another Bear Stearns lurking out there. You never until it's too late.

"We're a capitalist society. We're meant to fail. Certain businesses are meant to fail and good things come from the ability to fail. The worst-case scenario is the government tries to solve all these problems and burdens the taxpayer with saving these banks that made bad decisions and made bad investments. If that's the case, whether it's the state government or the federal government trying to bail out every lender that goes bankrupt, then other banks will say 'I can only succeed because if I made a bad loans they'll bail me out and if they turn out to be good I'll make a lot of money.' The good is that the capitalist system works. Making bad decisions results in a penalty. It would be a mistake for the government to try and solve all these different issues. Wall Street needs to learn a lesson that everything doesn't go up forever.

"If we're in a down period, we're in a down period. They call it a recession because things recede. There's oversupply, too much product, too much capacity, so the economy needs to take a break and a breath. Unfortunately that means layoffs, firings and stress.

"Is there anything that's going to pull us out? Nobody knows. The smartest guys in New York and everywhere else, nobody knows. Oil is hurting the economy, but now the prices are coming down so that's good news. Will technology or the green effort create new jobs? Nobody knows.

"It's not a perfectly rosy picture. We're not going to bounce out of this so fast. The past four to nine years were a boom time. So there was real overcapacity, overbuilding and overpricing."