The Sim

Stiglitz Weighs in on the PPIP (And It's Not Pretty)

On Apr 02 09:35 AM CautiousInvestor wrote:

> Also, I'm not sure what regulatory authority would be used as the
> FDIC currently has authority and power to seize depository banks,
> but does not have similar authority for bank holding companies such
> as Citigroup. The Federal Reserve has authority to make non binding
> suggestions to bank holding companies.
>

they did it with WaMu

BoA's Ken Lewis Still Doesn't Get It

Welcome to Zombie States of America

The Big Banking Emperors' New Clothes

instead of fixing the solvency problems, the Fed pumped liquidity into them and brought them back to life like zombies.. unfortunately now the problem has returned even worse, can they continue to rejuvenate these corpses??


On Apr 02 01:45 PM EdG wrote:

> We all know banking is a cyclical industry and that the banks and
> that banks traditionally leverage themselves up too high in good
> times. That a lot of the banks would be insolvent due to mark to
> mark accounting is because of excessive leverage and a decrease in
> the value of their assets. A 30% drop in the value of houses is perhaps
> a 10% drop in the value of a bank's mortgages, which for a bank levered
> up 10 times is a 100% drop in the value of equity. What is not widely
> known is that a lot of banks were technically insolvent after the
> dot com crash.

The Big Banking Emperors' New Clothes

See www.moneyandmarkets.co... for further info on just how bad the losses may be at the biggest banks on the wrong side of their interest rate swaps...

Mark to Market: Time of Death 8:45AM, April 2, 2009

The investors still stuck in those frozen auction-rate municipals (anybody remember those?) ought to be able to suspend mark-to-market and sell their bonds at par back to the banks that sold it to them! I wonder if they'll be able to do that anytime soon..

Mark to Market: Time of Death 8:45AM, April 2, 2009

we all know how honest & accurate independent auditors are.. moody's, s&p, arthur andersen, bernie madoff...


On Apr 02 12:42 PM Misha wrote:

> The value of assets under the new rule will still be certified by
> an independent auditor. If a loan is performing, then a judgment
> of its value (based on the cash flow, etc.) will be used to assess
> its value. Its value is no longer zero if the loan cannot be sold.
> If a loan is non-performing then there is no option but to write
> it off. For a portfolio of loans this will get more complicated and
> may require a “significant” judgment to determine the value right.
> This is where PPIP comes in as a price discovery mechanism.

Mark to Market: Time of Death 8:45AM, April 2, 2009

I seem to recall the "financial crisis" being caused by the initiation of mark-to-market rules in 2007... maybe something to do with everyone suddenly seeing how horrible things were inside the banks. Well, we can't have that, so let's go back to hiding them again and a good PR push on CNBC will get America Buying Again!!

Stiglitz Is Wrong

oh boy..

you are right when you say the vast majority of banks do not have the leverage exposure of C or MS..

however, according to the 12/31/08 report of the OCC www.occ.treas.gov/ftp/... the FIVE largest commercial banks (including: C, MS, GS, JPM since as of oct. 08, there is no such distinction in America pretty much as IB vs CB anymore - they were all swallowed up under commercial bank regulations) -- anyhow, the FIVE largest commercial banks out of thousands are holding -- 95% of $200 TRILLION notional value of derivatives -- they are leveraged 40:1 assets vs equity!

All of the remaining total of commercial banks are only leveraged approx 1.4:1 which is generally a totally safe and conservative level, of course.

So $190 TRILLION out of $200 TRILLION derivatives (particularly interest rate derivatives - and see www.moneyandmarkets.co... for further analysis) are held by FIVE banks which are collectively leveraged 40:1 assets to common equity

(let's not even begin to discuss the Federal Reserve itself, which is self-admittedly [if you saw any of bernanke's recent testimony over the last few weeks] leveraged at least 50:1 and going higher..)

HELLO! MCFLY!

omfg..

Why I'm Holding On to Citigroup Stock

if those assets are so valuable, wouldn't it be more profitable for the government to put citi into receivership and wipe out the equity side?? this is like paying the left pocket from the right pocket, and calling it a profit! isn't that what bernie madoff did??

In This Spoon-Fed Rally, Never Underestimate the Herd

lol @ "mega rebound"

the stock market will put everyone back to work!

As GM Goes, So Goes the Nation (Part 2)

@Ricard, good point, and a previous comment mentioned MSFT as well in some relation as being one of the top American companies, and I couldn't help thinking that in today's Internet world they could just as easily go bust but much quicker than GM in Internet time.. Only at least for MSFT, they've got one up because the original founders are still there, unlike GM crony execs and board with no real skin in the game at all.

How is it that after all these years of losses Wagoner is still the CEO? He 'knows' what is right for the company? Forget about short-term vs. long-term results - he has failed on all accounts! Show me the money?

The Three Riskiest Banks - American Banker

Nationalize or Die!

Eight Reasons Bank of America Is Going to $20

TAKE BACK OUR MONEY FROM THE BANKERS - NATIONALIZE OR DIE!! www.nationalizeordie.c...

XMSR and Sirius: Bigger Problems Than FCC Approval

Wait until they start making ipods with builtin satellite receivers.... $$$

XMSR and Sirius: Bigger Problems Than FCC Approval

The big winner in all of this is Mel Karmazin (and SIRI stockholders) -- even if the merger is ultimately prohibited by the FCC, in the long run he has pretty much killed XM. It will continue to wither away, and SIRI will emerge as the ultimate leader in the field. It will just take much more time and money than if the merger goes through (on QUITE attractive terms to XMSR shareholders, btw). It is obvious the merger must be approved quickly by the FCC, for the good of the marketplace.