Christopher Whalen

Banks Stressing the System vs. Potential Winners of the TARP Repayment Race

Tyler:

Good piece. You sure that the T1 capital series in the chart is correct? Tier One Risk Based Capital excludes many but not all intangibles. Are you subtracting the remaining intangibles to get tangible common? For example, Citi has $30bn in total intangibles in the lead bank. $20b is disallowed as part of T1 RBC. But there is still $10b in intangibles in T1 RBC, so I take out the remaining items.

Chris

US Bancorp: The Other Big Bank with Big Problems

Note sure that USB, WFC are good indicators for rest of the industry. We rated both of these banks "A" as of Q3 on our soundness ratings, but expect both of these names to weaken in 2009 along with the ROTW. With WFC, the issue is Wachovia. With USB, let's see how the charge-offs look in Q1 then we'll know how much to put USB with the big zombie banks. Bottom line is credit culture and how quick these banks are willing to clean house. Right now, some of the nasty looking situations are actually righteous, while turkeys are still hiding among the "above peer" banks. Picking the righteous and avoiding the turkeys is the trick right now.