jimmy smith

The Three Riskiest Banks - American Banker

One thing: TCE is important (much more relevant to equity holders than Tier 1) but what's really important is how that balances against the types of assets the bank holds on (and off!) its balance sheet. Some banks with really conservative underwriting (and no toxic assets) can survive with lower TCE, and vise versa.

So, you must scrutinize the quality of the loans and other assets. TCE is just one important data point, but not the whole picture. For example, I'm not sure you should be buying JPM on the basis of its TCE because its got a boat load of nastiness on the balance sheet which'll be hitting TCE pretty hard in the upcoming quarters.

Bigger is Not Better in Banking

regarding JPM: if Whalen is correct and losses are 4% of loans (big if) and JPM is average (big if), then they'd loose $58B. JPM has $131B equity (not including the $11B they just raised or the $25B coming from Paulson), so i'm not sure how he sees them becoming insolvent.

personally, i think this guy is contracted by some funds who are/will be short. if he can scare enough investors he and the hedge funds could create a run on the bank. being short (whether in the CDS market, with Puts, and/or naked shorting the common), you'd make a lot of money...but they'd destroy an American institution in the process.