That same glut is killing the hopes of regular folks who had hoped to peddle off their property at any sort of a profit. The median price of a sold house in the U.S. has fallen 7.1% between July 2007 and July 2008 — a trend that shows no sign of slowing.

Thud.

Just this weekend, we heard that a Kansas bank (the ninth this year, by my count) has gone the way of all FDIC-insured deadbeats.

The banks that fomented this mess in the first place (by pitching loans to anyone with a pulse) continue to rack up truly awesome losses. Anyone who claimed over the past few months that the worst was over for the financial sector has pushed their credibility so low as to be flirting with plain and simple fraud.

Standard & Poor’s, which initially smiled benevolently as Wall Street flung about worthless paper touted as pure gold, now states that U.S. banks ought to set aside another $2.65 billion against mortgage losses PER ANNUM if they wish to survive the next three years.

S&P’s managing director for financial institutions even went on record last Thursday, warning that “losses will first center on residential-mortgage related loan books and then on homebuilder loans.”

She followed those dire words with the following assessment of the situation on the ground: “This will probably go on record as the worst period for banks, not only in the US but potentially abroad as well.”

Some say that the folks at S&P are still being conservative when they warn that the sector won’t approach anything resembling “normal” until 2010. Be that as it may, this latest report rounds up the damage just here in the U.S. to better than half a trillion dollars.

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