Post Tagged with: "accounting"
U.S. forfeiting billions in future taxes to let Citi repay TARP
The Washington Post is reporting that the federal government has quietly decided to exempt Citigroup from a large future tax bill in allowing it to exit the TARP program. This is a backdoor bailout worth billions and is an outrage that demonstrates the lengths to which government will go to gift these organizations taxpayer money.
Reaching for yield in the post-TARP era
When I read Yves Smith’s recent comments on Bank of America’s repayment of its TARP funds, I couldn’t help but think of a post I wrote six months ago called "Asymmetric information and corporate governance in bank bailouts." The gist is of the post is about the same as Yves’ and it was inspired by
Quelle Surprise! Most Big Banks Lack Capital
My post title is an ode to Yves Smith, who likes to feign surprise when the blindingly obvious finally comes into plain view for all to see. The latest sign that underneath the surface weakness remains at large financial institutions comes courtesy of Standard & Poors. According to the Telegraph’s Ambrose Evans-Pritchard, S&P believes many
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