Posted on 04/26/2009 7:50:47 AM PDT by pissant
If you take the headlines at face value, it has been a good month for banks. Wells Fargo announced $3 billion in first-quarter profits, Goldman Sachs racked up $1.8 billion, JPMorgan Chase had $2.1 billion, Bank of America $4.25 billion and even beleaguered Citigroup tallied $1.6 billion in profits. Treasury Secretary Tim Geithner validated the good news by declaring that the "vast majority" of the nation's banks are now well capitalized and solvent. Markets rallied. The worst of the financial crisis, it seemed, had passed.
Smart investors know better. At the core, this financial crisis has been driven by uncertainty—about who's holding what, how much it's worth and when it might blow up. A careful look at last week's profit news reveals that there's still plenty of uncertainty lurking on the balance sheets of America's top banks.
First, the most glaring examples: even as Bank of America was chalking up its profits, it was also warning that it faced growing credit losses, due to a decline in credit quality across all of its businesses (the bank's provisions for credit losses rose to $13.4 billion in the first quarter from $8.5 billion in the last quarter of 2008). "Make no doubt about it," said BOA chairman Kenneth Lewis, "credit is bad, and we believe it will get worse before it eventually stabilizes and improves."
At least he admits it. Goldman's chair Lloyd Blankfein certainly didn't go to any pains to explain that a chunk of his bank's good news came not from savvy trading, but from an accounting shift. Goldman switched from being a securities firm to a bank holding company last autumn, which changed its fiscal year, allowing it to leave much of December—a month with plenty of write-downs—largely off the books. And that's only the bad news that we
(Excerpt) Read more at newsweek.com ...
The banks saw a golden goose with King Obama and milked him for what it was worth. King Obama and his corrupt ignorant Administration bought it. Now most of the banks realize they lost more than they bargained for and want out. But the King of America wants control and he has it. Joke is on all that took bailouts and sad to say, I’ll never do business with a bank for the rest of my life. Screw them. Sames goes with all that took bailouts.
Vanks want to repay the TARP money but the govt wont let them. It’s all about govt control and nothing more. It is sinister and insidious. This would make a great movie plot if it weren’t really happening!
.....read: more mortgage defaults, more credit card defaults and more car loan defaults.
one of my wife's girl friends is in deep debt...she and her spouse went to see the credit doctor...after looking at the credit card bills, the credit doctor says “well,you could just not pay them”....I couldn't believe it....a “professional” credit councelor recommending default! you wonder how much of that advice is going around.
This is what happens when people do not have the common sense to save for rainy days or sudden financial disasters that happen to them. Americans need to rid themselves of debt as soon as possible. Spend money only on essentials. Pay down debt. Pay all necessary bills first, house mortgage, car payments, insurance, monthly food bills, etc. DO NOT DEFAULT AS THIS WILL ONLY DESTROY YOUR CREDIT RATING.
...that’s good common sense advice Ev Reeman....I like to watch the guy on FOX that has a call-in show on getting out of debt...he makes good sense too.
Don’t kid yourself. Many of the big banks didn’t see Obama as a chance to cash in. They were forced to take the cash. Some were pushed to make bad acquisitions. Others were “encouraged” to take the cash because the government wanted to prevent a negative stigma for the banks who needed it. Now they can’t give it back if they want to because of a “stress test” that most financial experts say is a farce. As someone who used to make commercial loans I guarantee you I could write conditions that no company would be able to pass if I had the inclination.
I’ll never understand whay people worry about their credit rating.
Why worry about a credit rating? If you’re having severe difficulty in paying bills, your credit rating is already shot. In that case, the last thing you need is a credit rating ... you need to quit borrowing money.
As a practical matter, it’s probably better not to pay. That way one can squirrel away some cash. Plus, one has to be in default of one’s mortgage to qualify for the Bush/Obama mortgage assistance.
Some may object that such behavior is immoral, dishonest, or unethical. It certainly would be in a country with free markets and individual liberty, but we live in a post-capitalist mixed economy that is rapidly nationalizing the entire financial sector. Is it really immoral, dishonest, or unethical to stiff lenders that are owned or controlled by a corrupt socialist or fascist State?
In a time of serious need (and I mean real NEED) I would have no problem defaulting on credit card payments. Banks take a major risk themselves when they extend credit in this manner, and they usually charge high interest rates because they have an EXPECTATION that a substantial number of their accounts will default.
I guess I’m a little old fashioned. I believe we should all pay for whatever goods or services that were rendered. Defaulting or declaring bankruptcy is a lot like shoplifting. You’re getting something for, in some cases, nothing.
I realize that sometimes people have no choice. But it should be a very difficult, moral choice. Today, bankruptcy seems to be the bastion of first resort, not the last.
The economic crisis that we’re having today is a cultural problem. One that banks, corporations and individuals believe it’s okay to give up the personal responsibility to fulfill a contract.
Without a moral code that bound by ethics higher than the letter of whatever your lawyer says you can get away with, the free enterprise system fails.
banking books are still messed up due to the FAS 157, mark to market accounting rules. However, it is a good time to be loaning money, spreads are good and banks will make money IF they can get money to lend. The insidious problem with mark to market was that fictitious losses, far greater than the sub-prime/foreclosure problem, caused banks to hoard cash and to use all of the TARP money to offset book losses and maintain capital requirements.
As others noted, the “Stress” tests were a farce as well, Falkenblog and Bronte Capital have done exhaustive examinations of this, probably in far more detail than anyone from the FDIC and the Treasury.. FWIW, we’d see another bounce in the market if Sheila Bair were sent to do anything other than her current job.
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