Pj568

Who Owns the Derivatives Market?

Open Questions:

Is it correct that the problems are only (mainly) in the naked CDS positions ?

If CDS accounts for 15% of the total derivative contracts then that is the maximum naked positions on a notional basis. What then is the net positions? If unknown then what is the estimated net?

Since this has been prime news since 2007 what has been the progress,if any, by the fed or accountants in ascertaining net positions, recognition of losses and making adequate disclosure?

Bank of America Raises a Whole Lotta Money

Premarupa,

The answer is conflicting news. BAC demonstrated that it could raise needed capital with offering only a 9% discount. You also had a dilutive effect. With a non distressed company one would expect a fall in price to the new issue amount but BAC is a distressed company in a distressed market and who knows what the price will do.

To interpret, the event the media mavens would just say that the market had already priced in an even greater dilution that what actually occurred or that we know that BAC can obtain the capital needed to go forward. Take your pick.

Citigroup: Levitate Above the Frenzy

Rational reasons for the quoted 22% short position:

1) Future losses expected
2) Current dilution not fully recognized
3) Further dilution expected
3) No transparency in the sector
4) Institutional and national deleveraging still occurring
5) Insolvency
6) Financial crisis is not over
7) Still in a recession

Paulson Changes His Tune on BofA and Merrill

Where does it say that "when pressured you have to give in". What does pressured really mean anyway, did he believe that the government was going to punish BAC. Lewis got suckered trying to become a JP Morgan. Who really knows, but it appears JP Morgan came out on top with "Bear".

Blaming Bankers When Government Is Really at Fault

I can't agree with any statement that diminishes the role played by the Bankers. Although bankers are trying to deflect their responsibility in this mess, the situation would not even exist if they had demonstrated any type of common sense in their desire to increase ROE though increased leverage and failure to understand the risk of their products and off balance sheet structures.

Bank Stress Tests: Tangible Common Equity a Critical Metric

We know government is not the brightest nor leading edge when it comes to financial analysis.

My question is where have all the experts, banks execs and other corporate gurus been to have ignored this. Are there really any true experts in our corporate suites?

Sadly to say, the mega banks didn't want to cut common dividends until the Feds forced them.

This whole thing is just pathetic.

Wall Street Breakfast: Must-Know News

Boston Scientific (BSX): Q1 EPS of $0.19 beats by $0.07. Revenue of $2.0B (-1.8%) in-line. (PR)

Don't you just hate it when the GAAP loss gets in the way of those good profit numbers?

Big Debt and Big Returns Could Be Spurring This Rally

It will be difficult for any financial services company to return to prior levels just due to the change in basic fundamentals underway. Several have had to: issue additional stock, are decreasing their own leverage ratio's, decreasing leverage of their customers and eliminated dividends. That's a big load to overcome with their history of settling for ROA's of less than a percent.

FASB Unlikely to Suspend Mark to Market

FYI - the discounted cash flow of many of these CDO's were originally computed with assumptions which are signifcantly different today than when originated.

We now know that home values are down 50%, not growing 3% for eternity; default rates have quadrupled to 5% and increasing; they assumed borrower income was real as opposed to being fabricated; they assumed that the security had legal title to the mortgages which appears to be a misnomer; early payoffs were severely underestimated and who knows what else they missed. These items are permanent and can't be recaptured in future cash flows.

In other words the discounted cash flow value might not be that far off from the "market value".

Surely the bankers are not asking to use the original assumptions (historical value)or are they? They have yet to tell us how much what their current estimate of value is and how much it actually varies from the current market value.

Don't Blame Mark-to-Market for This Crisis

MTM is part of what the hedge fund staffs have done for years in ascertaining company value. Now that MTM numbers are available to the common investor as part of company reporting, why do away with our free access?

The 'Sell After Dividend Cut/Freeze' Rule, With Exceptions

Hasn't anyone ever heard of using that old fashion money management technique, a "stop loss"?

Are U.S. Banks Really Worthless?

If the hedge funds and billionaires of the world aren't buying this argument then I'm not either.

Financial Stocks: Playing the Mark-to-Market Suspension

Mark to Market isn't going away. It came about due to the investor community representation on the FASB board. It helps align GAAP with international accounting standards. The US system has been moving for more transparency for decades. Country regulators may decide to change their standards for regulatory purposes but to disregard the investor community would be self defeating.

Ken Lewis on Bank Accounting: Sensible Talk from a Surprising Source

It seems quite rational that earning increase in good times and decrease during bad times. Why does Lewis and Brown think otherwise? The twisted squirrel analogy is weak.

There's nothing in the accounting rules that prevent companies from increasing capital during good times, when available & cheap (fall) and saving it for the bad times, not available and costly (winter). Isn't this really the message behind squirrel analogy?

What's sad is that the bankers seem to believe that the problem is in the accounting and not in common sense.

The Paulson Plan: Compelling Banks to Lend at Bazooka Point

Isn't WFC on record saying they were going to raise 20B in new capital to support the Wachovia 7B stock acquisition? This seems cheaper and less dilutive than what their other options were.