Gollum

JP Morgan Rolls the Fed of New York (and BSC)

"Because of this huge OTC derivatives book, the $1.6 trillion asset bank can tolerate just a 15bp realized loss across its aggregate derivatives position before losing the equivalent of its regulatory Risk Based Capital [RBC]."

How do you know this? Does JM publish it? Where?

Commerce Bancorp: Why Tim Long is Wrong

1) I think it would have been in Wells Fargo's best long-term interest to take the non-cash hit, which would have a temporary negative effect on its balance sheet and earnings, all of which would be recouped.

2) I think it might be in Wells Fargo best interest to apply for a State charter to replace the OCC charter. Not only would Wells Fargo move outside Mr. Long's jurisdiction but it would pay lower fees to the State than it pays to the OCC.

3) I understand that examination reports, correspondence, etc. are confidential by law. I wonder how you acquired confidential information and whether it is legal for you to publicize it.

What Does Jim Cramer See in Commerce Bancorp?

You say that nearly 85% of the CBH portfolio of MBS has a maturity of five years or more, above the peer mean of 61% and adding considerable duration risk to the bank's balance sheet, though you don't say where you derived those numbers.

CBH's 3/31/07 10-Q reports:

Available for Sale Held to Maturity
Duration (in years) 2.86 3.47

Average life (in years) 4.99 5.18

Are your figures consistent with CBH's?

What Does Jim Cramer See in Commerce Bancorp?

I agree with much of your article but make the following comments:

You say that the ratio of core deposits to assets is high – and so it is. This is generally considered highly desirable since non-core deposits and non-deposit liabilities tend to be more expensive and “hot” – quick to leave the bank in search of higher yield.

You say that the drop in CBH’s non-core funding is “ominous.” I think it evidences that CBH is able to fund itself from retail deposits.

The danger may be in the MBS that CBH holds as a number of hedge funds and others are taking losses on MBS. I don’t know the quality of CBH’s MBS.