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Over the past few days, a number of major European banks have announced earnings results.  Two of the most dismal results were registered at the British company Royal Bank of Scotland (RBS) and at Germany’s Commerzbank. However, the similarity ends there because, while Commerzbank investment bankers received no bonus, the bankers at government-controlled RBS received [...]

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There are a lot of interlocking threads in the Greek saga. One consistent theme that ties all of the different threads together is the fragility of complex systems. In our globalized and complex world of finance and banking, every major actor has  innumerable ties to other major actors such that devastating collapses in one entity [...]

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In 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). [...]

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While 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 [...]

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Credit 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 [...]

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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.
At [...]

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John 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 [...]

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Moody’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 [...]

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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 [...]

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After 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 [...]