Markham Lee_

Banks' Earnings Guidance Best Taken With a Bucket of Salt

I'm not excusing the bank's behavior, after all this particular article places the blame squarely on their shoulders. However, the cheap money provided by the fed was the catalyst for the situation AND the Fed is supposed to regulate banks and they failed in that regard as well.

Financial Sector Value Trap: The Worst is Far From Over

1) The main problem isn't the credit crunch it's the fact that their customers aren't paying back their loans, a trend that is worsening, not improving. CFCs losses from lending will be greater in Q4.

2) The Commercial Paper markets are just as bad now as they were in Q3, and CFC isn't anymore credit worthy.

3) Mozillo has been calling Mortgage Bottoms for months now, he's been wrong for months, why believe him now? In fact, trusting CFC's guidance and judgment is a fatuous endeavor at this juncture.

4) CFC has massive lending needs and with loan losses accelerating, lending costs increasing and loan originations declining (i.e. they're generating less revenue) difficulties in selling loans, etc, the environment is worsening, not getting better.

5) Simply Put, there is very little empirical evidence to support CFC's claim of a return to normalcy, especially within the context of their bad decision making. This is the same company that was on a hiring binge in July and a layoff binge in August.

-M

The Superfund's Merits: Sorry Hank, I'm Just Not Buying It

There is a difference between keeping Citi from going out of business vs. saving them from some financial pain. Not to mention the fact that other banks will be using it to "avoid the pain of bad decisions" and Citi will be collecting fees from their usage of the conduit.

If an institution truly needs to be bailed out and it IS in the nation's best interest, there are ways to do it, without creating an environment of risk free capitalism and paying various institutions fees as a reward for their bad decisions, which endangered the nation's economy.

Q3 Earnings Season: Taking the Long View

That sounds interesting, as it would definitely give readers the ability to view changes to those numbers over time. Instead of the usual, only knowing the current and forgetting the past.

-M

Banking Stock Rally: Jumping the Gun?

I'll go on record as to say that I'm long USB, so I wouldn't disagree with that decision.

Citibank has solid international exposure, better than the other retail banks so whilst I'm "worried" about the short to medium term, the long-term should be fine.

I think BAC will face stagnation as they can't really grow more via acquisition as they're running into the 10% of all US deposits rule. Furthermore, banking profit growth is going to slow down as the prior years inflated profits.

If were to rank:I'd say USB is a buy, C is a push and BAC is a hold.

But that's just my 0.02

Disclosure: I'm long USB

Bank of America: Countrywide’s White Knight

To be sure, CFC isn't LEND or NFI - is it expensive short-term financing to avoid trouble? Sure. But the light at the other end of the tunnel is a lender capable of funding its loan volume via its retail banking operation and then selling the loans to the mortgage GSEs.

The investment is a costly way to help ensure that happens, but once it does CFC should be able to survive IMO, it won't be a pretty trip, but I don't see the company collapsing.

$2B is a fraction of their loan volume, so it's not quite accurate to say it's the equivalent of borrowing at 21% and lending at 6.8...when you fold the investment into their overall loan volume, the effective cost (assuming it helps ensure continuous operations) is actually quite a bit smaller.

Either way, time will tell


-M

Consumer Credit Usage Spikes In June: A Sign Of Consumer Spending Strength?

You're probably right as nearly every week I get "convenience checks" from my Credit Card companies, which offer lower rates than I get on the respective card and can be used for anything. I also get regular notices touting their bill pay service, which can be used to pay anything as well. It's no wonder credit card losses are increasing, when banks are encouraging customers to use them to pay for all of their bills.