The business stories that matter, by Fortune's Colin Barr
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March 26, 2008, 11:37 am

How the banks lost their marbles

Financial stocks resumed their swoon Wednesday, led by a 5% drop in Citi (C) after Oppenheimer analyst Meredith Whitney cut her earnings estimates on the banking sector. The selloff shows that even after stocks staged a rally in the wake of Monday’s Bear Stearns (BSC) buyout sweetener, investors remain worried about the health of the economy and the ramifications of the credit crunch. While many observers are still puzzling over how we got into this mess, Steve Waldman at Interfluidity offers up a strikingly simple explanation in his Credit Crunch for Kindergarteners.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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