Very simple. Loan losses (not yet realized) probably exceed capital.
If I had to guess, I’d guess JPM and GS are the only big financials that are not underwater.
Sure, maybe the others might earn their way out of the hole before the day of reckoning but it is a shame that all that capital can’t go to productive activities including prudent banks instead of this long drawn out bailout and fraud.
This was interesting too, "Net interest margin in the second quarter of 2009 was 3.24%, up 7 basis points from the second quarter of 2008, reflecting significantly lower cost of funding, largely offset by a decrease in asset yields related to the decrease in the Federal funds rate and the FDIC special assessment of $333 million. Non-interest revenue increased $13.6 billion from a year ago, primarily reflecting the gain on sale of Smith Barney, lower write-downs and gains on exposures in Citi Holdings
Operating expenses decreased 21% from the previous year, reflecting benefits from Citi's ongoing re-engineering efforts, expense control, and the impact of foreign exchange translation. Headcount of 279,000 was down 84,000 from June 30, 2008 and 30,000 from March 31, 2009"
I may move money out of U.S. banks and check out banks like TD and RBC Centura. Canadian banks are among the safest. We also have HSBC which may be okay too.
JPM has huge derivative exposure. I wonder if Mellon/PNC is okay or US Bancorp. Bank of NY too but do they do any consumer? Forbes said Wells Fargo should be okay too.