Jim Rich

E*Trade: Why the Strange Earnings Report?

A nice comment during the call was that if another accounting method were chosen, the co would have actually turned a profit. Maybe they should have used that and then written down more reserves to show a loss of only 20 cents. No, etrade remains realistic and honest given the current situation, and I continue to support and admire them for it.

While new delinquencies may be reduced that doesn't address the fact that existing ones are having to be written off (the change from $715Mil in Q4 to $451Mil in Q1 reserve). They do need additional capital to return to well capitalized status given the actual write-offs.

Now with that said; it may be as simple as accounting after all.. once a loan is issued, you'd like it paid back and that gives you an income stream for some period of time. Why is it then that a loss of income stream has to be written off as a total loss immediately instead of at the rate of missing repayment? The lack of that particular income doesn't really hurt the company now, it just reduces what they're owed. Of itself the default devalues the company, but then why must the company turn around and hurt itself more by moving money into a different column just for reporting purposes? Where did $264M reserve bank capital go last quarter?