Updated 535PM EST on 16 Sep 2008 to reflect information from this press release:National City Completes $7 Billion Capital Raise
While all eyes were focused on Lehman Brothers this weekend, many other players were making their moves to shore up their own balance sheets in order to avoid the critical situation which felled Lehman. Merrill [...]

In case you missed it, the financial system in the U.S. is near collapse. This weekend was unbelievable. Lehman Brothers filed for bankruptcy. The world’s largest insurer AIG is looking for the Fed to help it avoid collapse and Merrill Lynch was forced to close a deal with Bank of America to save [...]

Seven years ago, I was involved in a merger that was the last proposed under the old pooling of interests accounting rule that was phased out after June 30, 2001. This methodology was great because it didn’t necessitate acquiring companies to re-mark assets on the companies balance sheets to reflect impairment of intangible assets.
Needless [...]

National City is one of the regionals under the greatest pressure and scrutiny. This Friday afternoon announcement has to make deposit- and shareholders alike very nervous.

National City Corp., Ohio’s largest bank, said the U.S. Securities and Exchange Commission started an informal probe into the company’s lending and the sale of its subprime [...]

I fully anticipate this will happen, so the question becomes: what will the Fed do?
The FDIC stepped in at two banks over the weekend, 1st National Bank of Nevada and First Heritage Bank. These banks failed as a result of construction loans in real estate bust regions of the US. No, surprise there. [...]

1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California were taken over by the FDIC on Friday. They always wait until Friday night to do their business. This marks the first FDIC closure action since the FDIC closed the much bigger IndyMac.
Bad loans to developers and home [...]

Recently, the SEC restricted short selling on a list of 19 stocks because of turmoil following the Fannie-Freddie worries last week. In effect, the SEC was signaling that these institutions are too big to fail because a number of these companies were not subject to rumors of massive losses while a number of institutions not [...]

In the aftermath of the Meltdown of the GSEs and the heavy-handed regulatory solution used to stem the tide, regional banks are in focus for investors as they stand to the take the brunt of short-selling.
Financial services bears know full well that the regionals are not too big to fail. No one is coming [...]

As financial shares take a beating, it is a good opportunity to highlight the differential treatment of accounting for loans and for debentures and securities because this bodes ill for regional banks.

FAS 157
The crux of the difference in how loans are treated for accounting purposes and how debentures/securities are treated comes from FAS 157. [...]

Looking at today’s selling wave, a number of bank shares are down over 10% including Washington Mutual (WM), National City (NCC), Wachovia (WB), Zion (ZION). Many other shares are trading well into negative territory with share prices below $10 including KeyCorp (KEY), Fifth Third (FITB), Dearborn (DEAR), and Huntington Bancshares (HBAN). These are [...]