Jim Rich

TD Ameritrade-E*Trade Deal Needs to Happen

Ho Hum. ETFC under $1.90 is a buy regardless of any potential merger on the horizon. I hope they have a couple quarters to recover on their own, as that will give the best ROI to shareholders and customers alike.

Will TD Ameritrade or Charles Schwab Buy Up E*Trade?

Lets hope they aren't bought, but if they are and the bank is split from the brokerage then my brokerage money goes elsewhere. I'm a customer because I like the convenience of the combined services offered, and unlike some noobs that don't seem to understand there are trading rules, I am happy with their customer service as well.

Wall Street Breakfast: Must-Know News

Ohhh, some secret agreement with BAC. It's already well known they were asked to raise gobs of capital around that time, which they have. It's unlikely they aren't equally far along the path of whatever super "secret" stuff that was asked of them. Perhaps we should focus on things happening now, like earnings tomorrow and perchance a small dig to hold down stock price given JPM's nice earnings today.

On the article; thanks for the update!

Latest Outrage: Citi Increases Salaries to Circumvent Bonus Restrictions

This is a time when most people are happy to have jobs; for many a bonus is something they remember from several years ago, and certainly not at dollar values that came anywhere near their base salary.

The problem here isn't trying to raise salaries as much as it is when they are trying to raise them, and there is also the question of who is getting a raise.

C is still in dire straits; they don't smell quite so bad now because of accounting rule changes, but they really need to be using their money efficiently elsewhere just to stay in business. Who cares if a few jump ship to competitors, because a competitor can only absorb a finite number of people if they are doing their job properly. New specialty houses, lol, good luck with that. Those willing to work and invest in their own company will get payback enough IF the company survives and their stock regains some value.

As for who gets raises, give everyone 5% (only if the company can afford it). Someone pulling down 200K still gets a lot more out of that than those on the front lines, but the front lines keep the business running and they are the ones having to worry about such trivial things as gas prices and eating.

Why Is E*Trade's CEO Giving the Company to Citadel?

I am long and think this is about the best thing that could have happened. There are multiple positives from this deal that I commented on elsewhere. I'm going to have to disagree with you on this one. Don't be sad and keep accumulating while it's cheap; I think we'll be happy later this year.

Analysts Will Soon Upgrade E-Trade

Total delinquencies are about the same month over month, however those over 180 days are being written down, which means these improvements in sub 180 delinquencies are extremely positive.

Since the government refuses to properly manage TARP monies availability, the Citadel agreement guarantees ETFC the cash needed to weather the crisis. There is no longer a threat of ETFC disappearing which was the primary reason their stock price was still such a bargain. Not only that, but it reduces the amount it has to repay in interest over time and reduces the longstanding debt by converting it now, so the deal has three huge positives in that regard. I see no reason why the max price Citadel is paying must match market price or even influence it; ETFC is after all essentially selling debt and there is benefit to both ETFC and Citadel with this deal.

I also suspect with the money they need now available, they will change their accounting method as other banks did in the first quarter and start showing a profit (as they would have in first quarter, had they done it then). Whether the deal is close enough to do that this quarter or next is the question, but I'd give it a 60% or better chance of happening now.

Will E*Trade Survive? Four Ways It Can

If they wanted to take the company down they've had the opportunity to do so for several quarters. I've been pretty happy with Layton's performance and pretty un-happy with the TARP management and government toying with the capital reserve targets. I think Layton would love to exit his CEO position with the company on top of the competition having beat all the nay-sayers. Loan defaults are finally showing improvement and the question is can they earn, borrow or sell enough to survive in the short term while the remaining defaults are written off. I'd love them to do a public bond offering; I'd buy a 10 year note with a low interest coupon to help them out. Their survival is in my interest too as I like having all my finances serviced by one company... and I've seen what the competition looks like.

E*Trade: Why the Strange Earnings Report?

... if they asked, I'd reserve a few thousand to get them through the current situation. They already service accounts, and while it wouldn't be an FDIC insured account, they could still pay interest for those individuals willing to provide them with capital reserve by moving money to a new limited-access "capital reserve" account. Sign me up.Don!

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?

Wall Street Breakfast: Must-Know News

What's it to be? They said get out there and make loans, now they say you have to hold more capital. They can't do both at the same time! Seems the stress test was a waste of time if indeed lending was really needed to stimulate the economy. I thing they should be better and more regulated, but in this instance banks should be left alone to find their own path.

Exchanges Propose Weakened Uptick Rule

I don't recall when the original was created. It may have actually meant something back when an uptick meant a full 1/16th of a dollar -- how many remember just a few years ago when you couldn't just bid to the nearest penny. If you are going to short you should have to pay a premium for the privilege of trying to affect something you don't own. The proposal suggests an uptick rule only be active if the stock is already down 10% for the day? LOLx10. I counter that you should have to pay a 1% premium to the current price for the privilege of shorting.

Simplifying the Toxic Assets Plan

These instruments can't return to their previous values or even 10% less, because the bigger underlying problem was that incomes didn't support the housing prices that were being asked. Average housing prices can't remain substantially higher than the average family can afford to purchase for too long. What should happen is that actual mortgages be extracted from the instruments so the backlog of homes can start to move on an individual basis. Something needs to be set up to assist banks process the resulting short sales so investors AND normal prospective home buyers can both benefit. From your description, the only beneficiaries sound like those with several millions of dollars lying around...

E*Trade: A Bet Worth Making

I don't believe any verdict was ever out. They've been well over well-capitalized levels for the entire year. The fact is that when 14% of your shares are allowed to trade short any companies stock price can suffer.

They've been a recovering company since the beginning of the current downturn. They were the first ones to admit on their own problems were ahead, and that allowed the Citi analyst in Nov 07 to call a chance of bankrupcy which forced them to take poorer terms on asset sales they were obviously already contemplating, which eventually went to Citadel. Citi has continued to rate them a sell or underperform the entire time since, so how is it they can again "start" coverage at a sell? Big surprise there, lol. New analyst is noted however, but who cares still Citi.

ETFC has rebuilt customer base to their highest levels, been proactive and made hard choices before the other banks admitted any problem. I'd much rather own ETFC than Citi. If Citi did make a profit the first two quarters this year it's because we gave it to them.

No company that has received TARP funds wants the restrictions that go along with them. ETFC doesn't really want that monkey by their side (earlier commercials aside). Tarp would like to force new loans at a time when ETFC is trying to move the existing off their books and said after 2nd quarter last year they were discontinuing. Unless Tarp also allowed only inter-bank short-term lending then I would hope ETFC would have a new "do not touch" sign posted regarding TARP.

Go ETFC.

E*Trade's Brokerage Business Shouldn't Be Ignored

Skop, FDIC requires that a certain amount of cash be held to support the possibility of bad loans. The preferred amount to be set aside is termed well-capitalized and is determined as a percentage of outstanding loans. Etrade has quite a bit more than this level set aside, but considering the current climate it is prudent on their part to do so. If the financial climate improves and it turns out that money isn't needed then they will move some of the reserves back into the company where it will be recorded as a gain; just as moving it to reserve caused a paper loss. Yes accounting rules in this regard are very questionable.

The word toxic may have a place with certain types of loans, but those are mostly off etrade's books. What etrade did have at the end of the last quarter was a growing loan default rate as dis everyone else. I'd expect this quarter to be on par with or slightly better than last quarter. At some point, those that were going to default will have already defaulted...

Dissenting Opinion; I can't run the details right now, but I would note as above that there will be a plateau and fall in loan writeoffs - eventually. The bank would otherwise be self sufficient, and paying a pretty decent interest rate I might add. Loan balances are being reduced by attrition as ETFC is not writing new loans, and there is the likelyhood that the company they funnel their loan requests to will pay some form of discovery or origination fee.

I believe a lot of people that are customers of ETFC and love the convenience of the combined brokerage and bank platform probably also own some of their shares. It is true for me, but the downside is that their current stock price prevents using those holding for margin buys, so I play an accumulation game which by nature is not as active -- but it will be once they get back to $3. It's interesting that their market cap is only $345 million when they have $1.2 Billion in cash reserves, a growing customer base, and active trading (even if those rates are not as high as some competitors at the moment).

E*Trade's Brokerage Business Shouldn't Be Ignored

... before I get called on it my last line should above should say "well-capitalized", not "over-capitalized", although it might be nice if they had such a label. The three defined levels correspond to scary, low and okay which leaves nothing officially defined for better than okay; why is that?