You know things are bad when an assertion like this doesn’t seem that surprising at first glance:

U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent”

That from star economist Nouriel Roubini, whose extremely bearish calls have often proved prescient in this crisis, via Bloomberg. In my book, just about anything he says is worth a second look.

Here he is again:

“The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.”

It sure seems that way, but a lot of people want to act like it’s not. Roubini suggest Obama will have to put $1 trillion in capital into the industry to recapitalize it, meaning to make it solvent with money to lend.

Here’s why:

“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.