Luke Johnston

Will E*Trade Survive? Four Ways It Can

Someone mentioned this, and I have felt this way for over a year:

2. Citadel, which owns 20% of ETFC and most of their debt is better off letting ETFC go under, then sccooping up the assets it wants in bankruptcy court, leaving you shareholders with nothing.


Also, this comment in the article is highly misleading:

"Evidence of this phenomenon was observed last Friday when E*Trade filed for a $150 million stock offering and the share price actually rose by 16%."

The stock fell from $2.50 to $1.50 on news that capital was going to be raised, thats over 40%. The fact that it bounced a mere 16% when they actually filed doesn't mean much.

E*Trade Intentionally chose not to use markt to market. They Intentionally wrote off just enough to miss earnings. They control how much they set aside, and they always set aside enough to miss. They know what capital ratios would put them in their regulators "distressed" category.

So, by not using mark to market, and writing off more than needed, they CHOSE to place themselves in this distressed situation which results in dilution.

They have a $1Billion set aside in provisions that have not yet been realized as losses. If you put half of that back into the bank they would be well capitalized.

How can you possibly think that managment is working to improve shareholder value?