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Credit Suisse has a note out urging caution on Citigroup shares due to regulatory hurdles. Their logic bears noting as it can be useful for other U.S.-based banks.
On Monday the CS analysts met with Citi management, who were somewhat cautious. The CS note indicates that regulatory changes in the U.S. are likely to mandate higher [...]
accounting's tag archives
Credit Suisse cautious on Citigroup due to regulatory hurdles
Nov
Ten lessons from financial crisis investors will soon forget
Nov
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A friend sent me the following presentation earlier in the week when I was feeling a bit ill. So I neglected to post it. But, I want to return to it because it is in keeping with my recovery/depression theme. These are the issues that were complicit in the latest financial crisis and almost none [...]
How well capitalized is Citigroup?
Nov
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In a recent post, “How is Citi going to deal with $38 billion in deferred tax assets?,” I pointed to a Reuters article which called into question Citigroup’s ability to earn enough money to prevent its having to take a charge for an incredibly large deferred tax asset. That post generated a response from a [...]
How is Citi going to deal with $38 billion in deferred tax assets?
Nov
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Citigroup has been losing tens of billions of dollars over the past two years as the financial crisis has unfolded. If one considers the government capital that Citi has not paid back, the bank is clearly the weakest of the four largest legacy banking behemoths in the United States. Earnings results this year demonstrate that [...]
How much money is Wells Fargo really making?
Oct
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The 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 [...]
The G20 Summit: Hijacked by neo-liberalism
Sep
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Marshall 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 [...]
FASB: Mark all financial assets at fair value
Jul
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This 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 [...]
What’s in your wallet? Probably higher interest rates.
Jul
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FT 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 [...]
Repayments will make banks weaker and could lead to more failures
Jun
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Yesterday, 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 [...]
A reader’s excellent comments on mark-to-market accounting
May
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I 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 [...]
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- “Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).”
-- Ben Bernanke, National Economists Club, Washington, D.C. November 21, 2002 Federal Reserve
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