On April 7th, I wrote regarding my concerns about Italy’s banking system.  I had spoken the night before at Fordham’s Gabelli Graduate School and discussed my concerns. I feared that the terrible state of the banks could lead to the destabilization of the Eurozone and Euro, as a failure in Italy’s banking system would have a far greater impact than those problems posed by either Greece or Cyprus.

On Friday, Veneto Banca and Banca Popolare di Vicenza failed!  However, a little hocus-pocus by the Italian government is going to allow these banks to remain open. How? Well, they will be split into good and bad banks. What is the cost? It is currently estimated that it will take about $13.4 billion to rescue these entities.

The emergency action taken by Italy’s government may not be legal, and worse, this remediation is just another band-aid on a problem that needs a tourniquet.