ShareIn the lead-up to the credit crisis, I really didn’t write a considerable amount about second mortgages despite my focus on credit writedowns. At that time, I was more focused on writedowns from securitized mortgage paper (and later construction loans and commercial real estate because of the stress these loan types put on regional financials). [...]

ShareWhile many companies can use the huge increase in market returns to mask a looming pension crisis, the problem is still acute. Because of actuarial accounting, pension funding problems are pro-cyclical.  Companies look flush with cash during upswings to the point where the pensions can actually goose earnings.  During downswings, this process works in reverse.
When [...]

ShareCredit Writedowns has made it clear how little will there is in Washington for substantive reform in financial services.  But, let’s be more explicit in this post about what policy makers are doing.  I will use the recent Citigroup TARP brouhaha and changes to the implementation timetable of accounting rules as the vehicle for this [...]

ShareThe 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.
At [...]

ShareJohn Hussman’s latest weekly contribution contends that the market is now extremely overvalued, to the point where long-term returns will likely be low.
As of last week, the S&P 500 nearly matched the richest valuations, on normalized earnings, ever observed prior to 1995. While it is quite true that valuations have been higher for the majority [...]

ShareMoody’s anticipates continued losses at Danske Bank, SEB, and Swedbank due to large exposure outside of the Nordic markets.  In particular, exposure in the Baltics is likely to lead to continued writedowns for Nordic banking institutions.
The Irish Independent reports:
Danske Bank A/S, SEB AB and Swedbank AB will keep suffering losses from their non-Nordic businesses as [...]

ShareWhen 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 [...]

ShareAfter going bullish on bank stocks in April, two months ago I said most of the upside in bank shares was priced in. Since that time, shares have traded sideways to down.  I expect this trend to continue as headwinds like another wave of writedowns in the housing sector is felt. Credit Suisse came to [...]

ShareMy 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 [...]

ShareCredit 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 [...]