Vikram Saxena

Uneasy Silence About Regional Banks

What I wanted to highlight was the complete black out about the regionals. Given Team Obama's media savvy, I would like to see some proof before I jump in.

The note about preferred is from the WSJ article. I am including the relevant excerpts below.
Quote WSJ:
"In addition, it isn't clear what happens to hobbled regional banks that could have a hard time finding extra capital. Many are facing a deluge of bad loans to finance residential and commercial properties.

Regions, based in Birmingham, Ala., is among a handful of the tested banks without any privately held preferred shares that it could convert into common stock to boost its capital buffer, according to Deutsche Bank. That leaves it with a narrow range of options beyond turning to the government for aid."

On May 07 11:02 AM greedcanbgood wrote:

> "Many of these banks, especially Regions, do not have a large cushion
> of preferred capital to convert to common."
>
> Your analysis is incomplete unless you provide details. Otherwise,
> the reader is led to believe that all your regional listed are in
> the same boat and clearly, they are not.

Uneasy Silence About Regional Banks

1. I am sorry for the spelling error. This was done very late last night and Seeking Alpha's editor does not have a spell-check (or allow the built in checker of Chrome to highlight spelling mistakes).

2. Before the wireless revolution what you call the obscure was the more common idiomatic use of the word
www.thefreedictionary....


On May 07 10:36 AM Kenny Sullivan wrote:

> Ever hear of spell check? Poor spelling, poor grammar and an obscure,
> if not wrong, use of of the word tether are unprofessional. I began
> looking for errors in the article, rather than looking for content.
>
> Kenny Sullivan

Why Citigroup Imploded

Why do you bring Pandit into the picture? Since he came on all Citi has been doing is deleverage (from 20x to 12x), sell assets, and raise more capital. His problem is that he is not ruthless enough. Perhaps this crisis of confidence in Citi would not have happened if he had announced 50,000 job cuts six months ago.

Citigroup: The End Draws Near

Seems the news about the end of Citi was a bit premature. Talk about the mother of all bail-outs!

The Duplicitous Sheila Bair

To those who commented about Citi also benefiting from the tax break:
(1) It only applies if companies are bought as a whole not the case in Citi's offere.
(2) Citi does not have a lot of profits to write-off the losses again :(.

@VIC: Bill Ackman on Wachovia

Milt:
You seem to have missed the WHOLE point of Ackman's presentation and this article. The remaining assets after what Citi takes are worth MORE than Wells offer; according to Ackman between $7-$19/share.

Why Citi Can't Be a Global Universal Bank

You are still stuck in the 20th century. The future of financial services does not lie in the former First World but in the former Second and Third World. This is where a huge number of people are coming out of the poverty and are developing an appetite for financial services for the first time ever. The battle for a universal bank will be fought there, not in Omaha or Upstate New York. US Retail banking is hardly a growth industry. Citi is a brand which is recognized at the ground level in a lot of countries which you may have never visited. Can you say the same about JPMorgan or BofA?

AAA Bonds That Fail the Investment Grade Test

The market is already pricing the risk.
Here is what the different AAA ABX indices are trading at:
Index Series Version Coupon RED ID Price High Low

ABX-HE-AAA 06-1 6 1 18 0A08AHAA1 86.19 100.38 84.17
ABX-HE-AAA 06-2 6 2 11 0A08AHAB8 70.06 100.12 66.1
ABX-HE-AAA 07-1 7 1 9 0A08AHAC6 55.94 100.09 53.46
ABX-HE-AAA 07-2 7 2 76 0A08AHAD4 52.92 99.33 52.47

Another thing to keep in mind: The salvage value for loans on homes in foreclosure varies between 50-80% of the home's equityng depending on the size of the loan and the market condition. Assuming an average recovery of 65%, the number of loans defaulting has to be 3 times the credit support before the bonds get hit. And not all these loans were no-down payment loans; in many cases they homeowners had some equity in the deal.