Americans enjoy a good scare and will even pay to get one, perhaps explaining our fatalistic fads like bungee jumping.

But as with any other product, fearsome stuff has a point of price inelasticity, where consumers scurry for less costly alternatives.

How About $220?

A bungee jump costs about $75, and there's usually a queue up to the rail of the bridge.

Will people line up to pay $220 ($250 in hardback) for a book that predicts banking nuclear winter and a taxpayer bailout billions of dollars more costly than any previously predicted by the most frightening doom-and-gloomster?

Two relative unknowns in the field of banking have bet their futures that such lines will form.

Roger J. Vaughan, an economic consultant, and Edward W. Hill, a professor at Cleveland State University, are hawking a 366-page tome published by Washington Post Company Briefing Books.

It says low interest rates and fallacious accounting practices are masking bank problems that will take $218 billion to $276 billion to resolve, including an extra $34 billion to replenish the Bank Insurance Fund.

No one denies that the banking system has serious problems.

But the staggering numbers published by Mr. Hill and Mr. Vaughan are based on the severest of assumptions and interpretations that demand Evel Knievel-style leaps of faith over gaping statistical abysses.

Disastrously Optimistic?

Many readers will find those maneuvers hard to accept.

For example, the authors' optimistic scenario assumes an 80% discount for all bank real estate owned and all bank loans on nonaccrual - just short of a scorched-earth policy.

All loans 90 days past due are marked down 60% as are all restructured loans. To reiterate, this is the optimistic scenario.

Mr. Vaughan argued in an interview that he and Mr. Hill were justifiably heavy-handed regarding real estate owned because they didn't look at home mortgages and consumer loans, where he is certain huge, undiscovered problems exist.

"If they've blown it on real estate, they've probably mismanaged the other aspects of the business as well. That is our assumption," he said.

Which is like saying that, if your neighbor kicks his dog, he probably beats his wife and abuses his children.

Sweeping assumptions aside, the authors also made some mistakes of the sort that would jeopardize a graduate student's thesis.

They double-counted some real estate, exaggerating the bank problem's total cost.

Mr. Hill, in his own defense, said the error was slight and did not severely distort the book's final estimates.

But the Federal Deposit Insurance Corp. claimed the error amounts to billions of dollars and calls into question several of the book's tables.

Unoriginal Remedies

Can anything spare us this Stephen King-sized nightmare? The authors say a rollback of the federal deposit insurance safety net and adoption of mark-to-market accounting will save us.

These are safe positions - expounded for years by credible economists like James Barth and R. Dan Brumbaugh in far more scholarly treatments.

However, considering the odds against Washington's adopting either of these solutions, you might want to keep your $220 - and use it to buy an office building or an apartment complex after the Vaughan-and-Hill-sized crash.

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