The banks will need another $500 billion on top of the $700 billion being requested by Treasury Secretary Henry Paulson, says bond guru Bill Gross.
Gross told CNBC that the government's current plan will help clear up bank balance sheets but leaves just $50 billion in free cash to lend out.
"The plan goes far but it doesn't go far enough in terms of recapitalization," Gross 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."
Separately, banking experts already predict that the Federal Deposit Insurance Corporation (FDIC) could need an additional $150 billion to cover coming bank failures.
So far in 2008, 12 banks with assets of $42 billion have gone under. Indymac, which had $32 billion, was the largest by far.
Yet the FDIC has just $45.2 billion to back up its more than 8,000 covered institutions, reports Bloomberg News
Christopher Whalen, managing director of Institutional Risk Analytics in Torrance, California, figures FDIC will need $200 billion during 2009 alone to dig out additional failing banks.
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