ShareThe positive earnings announcement by Wells Fargo on Wednesday was marred by a sell recommendation from Dick Bove and a lot of chatter about credit writedowns and mortgage servicing rights (MSRs). I wanted to add a few words about the report, MSRs, and bank stocks more generally.
First of all, this has been a very good [...]

ShareMarshall Auerback here. This is a cross-post from an article I wrote at the finance site New Deal 2.0, a one-stop-shop for current news, sharp analysis and potential solutions of the country’s fiscal crisis.
We’ve said it before and we’ll say it again. As a matter of national accounting, the domestic private sector cannot increase savings [...]

ShareThis is a huge deal.  FASB is considering requiring all financial assets be valued at fair values on balance sheets.  Hat tip Andrew. Bloomberg reports (notice my highlighting in bold):
The scope of the FASB’s initiative, which has received almost no attention in the press, is massive. All financial assets would have to be recorded at [...]

ShareFT Alphaville is reporting that the credit rating agency Fitch puts credit card losses at 10.4% of outstanding loans.  This is a record.  Bad news if you are a credit card company.  So, what does one do in that situation?  You raise rates on customers that are paying, silly.
Citi’s rate increases emerged on the day [...]

ShareYesterday, I argued that allowing banks to repay TARP funds meant a continuation of overcapacity in financial services, which was a direct contributor to the credit crisis through its dampening impact on unlevered returns.  Some of the banks now free of the TARP restrictions are arguably still undercapitalised, but have been made to look better [...]

ShareI have had a number of posts on mark-to-market accounting in the recent past.  Most recently, the posts have suggested that accounting is going to be favourable to banks and their quest to present a well-capitalized face to the world (see the post “JPMorgan’s $29 Billion windfall”).
A reader who deals with accounting issues has seen [...]

ShareThe following Bloomberg article points out why I have repeatedly argued that banks will be earning a lot of money, Meredith Whitney’s counter-arguments notwithstanding. It also points out why the likes of John Hempton believe that the FDIC ‘stole’ Washington Mutual from shareholders and awarded it to JPMorgan, a view I have not supported (hat [...]

ShareKyle, a long-time reader, recently asked why I think mark-to-market accounting actually matters.  After alI, savvy investors know that accounting does not necessarily change cash flows.  I think his question has a lot to do with not just accounting, but also with the stress tests.
Kyle writes:
My point is that it has really NOT changed, and [...]

ShareBack on the 16th, I posted a link to a Wall Street Journal article by James Hagerty which detailed how the Federal Home Loan Banks were able to prevent asset writedowns because of guideline changes to mark-to-market accounting.  I think the implications will be significant.  Here is what the article said (emphasis added):
A change in [...]

ShareIf you read my recent post on How big banks earned so much money this quarter you would see that much of the income at Wells, JPMorgan, US Bank and others came from refinancing old mortgages. While this may be a boon to present income, it is very much a problem for the legacy [...]