S&P 500 Financial Sector Market Cap Continues to Sink

The market cap of the S&P 500 Financial sector continues to sink lower, and it is currently at just $959 billion after nearly reaching $3 trillion back in mid-2007. As shown in the table below, Citigroup (C) has by far seen the biggest decline in market cap of companies currently in the sector since it peaked on May 23rd, 2007. Citi's loss in market cap is nearly 10 times what the company is currently worth. It has also lost 11 times more than US Bancorp (USB) has lost, which has seen the 14th biggest decline, and C is now worth $11.8 billion less than USB! AIG ranks second in terms of losses with a decline of $166 billion, followed by Bank of America (BAC) (-$162 billion), JP Morgan (JPM) (-$83 billion), and Morgan Stanley (MS) (-$72 billion).

And on another note, Wells Fargo is now the biggest S&P 500 Financial sector company with a value of $99 billion. JP Morgan has fallen to second at $94.5 billion, and B of A is in a distant third at $65 billion. Not one company in the sector is worth more than $100 billion anymore. Oh, how the mighty have fallen.

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Comments

[driftwood2:]

The size of these losses, especially for companies like C, BAC, MS, GC, and etc is a rough indicator of how much money will ultimately be needed to bail them out. Some optimistic individuals are of the opinion that the bailout funds already provided by the government will be enough to fix our financial system. If that were the case, why would Citi, who received a mere $45B from the government, have lost $246B in market cap? If Citi had only lost on the order by $45B, wouldn't their market cap have fallen a similar amount? The truth is, Citi alone will probably require hundreds of billions of taxpayer dollars to be made solvent. Tarp is only the beginning.

Jan 14 05:48 PM

[ebenezer:]

Market cap loss may or may not be directly related to actual losses. Derivative exposure and secondary market securitization package holdings are the biggest risk. After that comes direct primary mortgage exposure with retained mortgages, and any efforts to mitigate mortgages sold on the primary market to FnM and FrM which are still held by those entities. Risk exposure to hedge funds who borrowed bank money to leverage their investment purchases could be huge if those funds default...say an average of around 30-40 times the assets of the funds who borrowed. If the banks had any credit default swap exposure of their own, and did not reserve payout amounts appropriate to the risk of the contract, the exposure increases. Next, credit card defaults and the securitization of those receivables can begin to weigh as heavily as mortgage package securitization on the package and derivative participants. There is a lot out there, complicated by the lack of regulation and disclosure requirements that ultimately flow back directly to the financial institutions and investors when defaults cannot be covered. Without derivatives and hedge fund unregulated gambling, the total current financial exposure would be magnitudes less.

Jan 15 08:09 PM

[discov:]

I think that this clearly shows common stock in banks is meaningless. The government and the banks don't care about common stock holders. Common stock is now a vehicle to steal capital through stock offerings. (actually maybe that's all over already, maybe it's just a vehicle to lose value).

I am buying RF puts, and I am not alone.

concisetrading.blogspo.../
Ryan

Jan 19 10:07 PM