kdo

What Else Are the Banks Hiding?

Just becauase it's securitized and "off-balance sheet" doesn't mean it will come back on. You need to look at individual basis for how that will happen. Most of it won't and the the bank is not the primary beneficiary of any of it, otherwise it already would be on the balance sheet. You need to find what out is guaranteed. It is a serious oversight to simply say there are off-balance sheet entities. It doesn't remotely encompass anything close to what the real risk is.

P/B vs. P/E: Measuring a Stock's Value

In general I agree with the sentiment of the article, especially when evaluating the market as a whole. However, when looking at an individual situation such as this, you obviously have to determine whether or not they will be an ongoing operating entity. Otherwise, your analysis would have said:

I should buy CFC, WM, BSC, LEH, AIG, WB, FNM, FRE, etc, etc. They have a low P/B!! Whoo hoo!!

In some ways you could approach this from a reverse angle. Note who in the banking sector amongst the fallen have much higher P/B ratios as a sign of a higher chance of remaining an ongoing operating entity which will benefit from the loss of the other cacasses.

Wells Fargo Can Hack Its Writedowns - Can Citi and JPMorgan?

Actually I'm not sure where you're deriving your economic capital in the equation from, so I'd be curious how you're getting an order of magnitude worse in your calculation. JPM has according it's own documents, from memory about $43.3 billion in EC (which is a risk based measure) in comparison to $83 Tier 1 and $120+ Total capital. JPM has an allowance ratio to nonaccruals that is very high in comparison to other companies. They do have a bunch of leveraged loans they can't sell. That's true. But that isn't the paper I'm most concerned about in this environment. If you can come up with a real calculation that brings up the EC calculation to $300 billion+, please share how you're deriving it too. Thanks.

U.S. Banks Still Need To Come Clean on Subprime

I haven't heard too much noise on this and have been waiting, because I've known it too, although the legalese makes it unclear to me exactly what will happen:

"The fact that they sold them won’t help as there are clawback provisions for bad debts and that will take ages to work through the system."

When you start to look at some mortgage lenders out there and the size of subprime loans they've sold off with the view that some of that may be stuffed right back up their @$$ (which I'm sure they will try), they start to look ever more like bankruptcy candidates, depending of course on how much recourse there ends up being. Some companies should essentially profit from this shakeout and some will get slammed. Have been trying to sort out which is which.

Anyone familiar with CA lending laws and the rights of borrowers to walk out on the loans? This is instrumental in understanding WAMU, because they're so heavily weighted towards CA. I have a friend who figures he's $100K upside down up in Sonoma. I've just started looking for details, but I believe he could probably walk out on the loan if he chose to and stick the bank with the problem. The laws are different in different states. If it's easy to walk, the banks exposed out here are gonna have a big problem.