Post Tagged with: "accounting"
Credit Suisse cautious on Citigroup due to regulatory hurdles
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
Ten lessons from financial crisis investors will soon forget
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?
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?
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?
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
The G20 Summit: Hijacked by neo-liberalism
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
FASB: Mark all financial assets at fair value
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
What’s in your wallet? Probably higher interest rates.
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
Repayments will make banks weaker and could lead to more failures
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
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
JPMorgan’s $29 Billion windfall
The 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
What the stress tests reveal about Obama’s thinking on banks
Kyle, 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