Results of the test of 19 banks

[*T*]

Re: Results of the test of 19 banks

No nobody even understands the rules of the game. Ive read the design summary of the first post and then trawled to find some bright journalist that has stiched the results with the test - guess what - Zilch - bubkass- nil - nothing.
so I committed suicide trying to work out what it all means - basically its paltry - the 19 expect to lose a tiny $600,000,000,000 in 2009-2010 total but this wont include the small caps of which you have a truck load.
But - working out the "worst case" senario was a little harder as the worst case is a hopefull guess unless of course you live in the future - what is a worst case ? who knows - like yesterday I had a job,today I don't, the following day my dog dies and the day after my GM pick-up spits the motor, come Monday the wife leaves with the Investment Banker who has been cleaning her pipes and empties the bank account on the way out the door,then the doctor rings about my tests and tells me Ive got 3 months to live and then Tuesday the Bank manager rings to tell me the cheque I wrote Friday to the mechanic that fixed the motor on the GM pickup that's spitting oil over the drive and down the street has frigging bounced (thanks Loving wife)and would I be so kind as to deposit $110.52c in the account to cover the fees and then the local authorities come around and fine me $5600.56c for polluting the waterways with oil from the Gm pickup motor which spat the dummy and then warns me additional charges will be sent once the full clean up is known. So I walk down to the corner drug store to get me a BIG bottle of JD whisky on the credit card (cause all Married men know they NEVER hold cash) The first card is overdrawn (I'm getting REALLY Cranky with the EX) so I flip the next one down No to that too( that F#@&*^g woman is unreal) so out comes MY amex and I get a hit - better get some cash out so I can eat a meal at Denny's tonite - what happens next is surreal (or so I thought) - Yep some low life who has been out of work since Macy's laid him off and has 6 kids and one on the way to feed (NAH, he's not a sex maniac she had 3 from the prevoius + his 3 makes 6 and the one on the way well it happens OK ) DECIDES that my cash and the Till cash are much the same. Of course I object and get shot three times. Well here's me laying in a pool of blood and the Paras come to pick me up ( cops just walked straight over me) They are nice caring men an ask me if Im insured - of course I am- the Missus handles the bills - they pull the blue card - phone to confirm if I'm covered and come back to me with the news that I really should have strangled that female a Long time ago. Any way I convince them Ive got a job, a missus that works for an well known Investment banker and a GM Pickup I own and is Low mileage as I don't drive it much plus shares in a little oil company which cost me $5600 with a lot of upside to come once they know how far the oil they discovered goes and of course I have an AAA+ credit history. Convinced Im a reasonable risk they stem the bleeding and put me into the back and head off to the emergency department of the local county hospital. So heres me thinking it can't get any worse and how if I get hold of the Ex Im gunner give her a slow and very painfull "full Brazillian" with the cheap chinese wire nips in got for Christmas topped off by crashing the party through the "Tradies entrance" for good measure, when the Ambulance pulls on the anchors BIGTIME and starts to slew all over the road. As this is happening my mobile rings (this REALLY happened today Gang) its GMAC credit collection on the line asking where the $586 is that I owe them. Now I'm a stickler for paying on time and I know I Paid that GM pick up off - 4 payments @ $11968.32 on a 48 month plan paid yearly on 0% interest loan and I have all the paper work to prove its frigging mine. This dude gets all confused going through my payment history as it appears I'm unusual in that I have paid on time and the full amount without excuses they normally get from the "usual clients" so it appears that GMAC/Ceribus have decided that all loans that have been discharged (and mine was a year ago) have to pay an additional charge to cover that discharge and all the messy paper work that occurs when someone has the Audacity to actually pay a loan out and not roll it into a new Vehicle. I Say's "see you in court mother #$@%r" as I only have 3 months to live, Im broke, got no job, no credit, no cash, no Car (but I own a hell of a lot of oil) Three bullets in me and the Ex is probably got the"tower of terror" in her.


but thats the worse case senerio or so I thought.

Seems the property prices and subsequently the rates recieved by the county have plunged faster than than an investment banker into a new and unexplored private venture area. Who would have thought that property prices would fall when the county worked out its formula to set rates based on an inflationary monetary system that guaranteed more property rates each year. Because they have fallen so far, cuts to services had to be made and the easiest to hide were the incidentals such as engineers checking county structures like roads,bridges, culverts and the like ........

It appears the bridge we have stopped on in the ambulance while I was telling GMAC to get stuffed on the mobile phone was eaten out with concrete cancer (similar to what is gunna kill me in three months) and no one was paid to check because cuts had to be made in the annual budget due to the shortfall in income because some idiot said use this formula as housing never falls in value so you never have to worry about falling revenue.

And then, the ambulance lurched to one side and steeply forward. Me having nothing but time on my hands thought about the worst possible senerio of this alarming outcome.
I might have three months to live if I survive this fall into the Mississippi river and yes Im broke, got no job, no cash, no credit, no working car (but a share in a shit load of oil ) and an Ex missus who I am covinced don't love me anymore,three bullets in me and GMAC on my ass thinking they are going to collect $586 on the small print in the loan documents. Yes this is a bad as it can get. The worst Case senerio.

Then we hit the water- Not as fast or as hard as I thought we would, in fact the initial fall was fast but it slowed as time went on caused no doubt by the crushing of the other structures under the bridge like the paddle wheeler carrying 562 people which broke the fall like a government fiscal stimulus package (you know - mostly volume but no real substance)
How bad can this get I thought as the cold water rushed in to the ambulance - I thought again about the worst possible senerio and what I needed to avoid it as I lost breath and I closed my eyes

When I regain my senses as a reborn, I'm Ben Bernanke - Chairman of the Fed, the ruler of the world and the holder of mankinds future and I KNOW FOR A FACT there is no GOD but me And that truly is the Worst Case Senerio you will ever face.

"Ka ching Ka Ching a finger is a powerful thing especially when a trillions the thing."

:p:rolleyes::cool::eek::mad::confused:

[Chris Coles]

Re: Results of the test of 19 banks

Thunderdownunder; with the very greatest of respects, could you make use of Rant and Rave instead of offloading into what is an international debate about something of great importance to many of us. Same goes to anyone else with the same "reflex". Chris.

[Slimprofits]

Re: Results of the test of 19 banks

Only five of the institutions were assessed for their derivates risk. Each seems to have been given a number of around $20 billion, making a total of $99 billion.

This has to be a load of manure. It looks as if a number was pre-determined ("let's call it 100K, put 99.3 in the report and split it up about even"). What ever happened to the other $500 trillion of derivatives? It can't all have been wished away.

Martin Weiss:

Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular — JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank — taking especially large risks:




At yearend 2008, Bank of America’s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank’s was 278 percent; JPMorgan Chase’s, 382 percent; and HSBC America’s, 550 percent, according to the Comptroller of the Currency (OCC). In addition, in the fourth quarter, Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital. Although the banking authorities have not defined how much exposure is considered excessive, Weiss believes that, as a rule, bank exposure to any single risk category should be limited to 25 percent of capital. Goldman Sachs has exceeded that limit by a factor of 42 to 1.

“Equally alarming,” writes Dr. Weiss, “is the fourth quarter OCC data demonstrating that record bank losses are spreading to interest-rate derivatives. Until now, bank derivatives losses have been limited almost exclusively to credit defaults swaps (CDS), which represent only 7.8 percent of the notional value U.S. derivatives held by all U.S. banks. In the fourth quarter, although the CDS losses continued at a near-record pace, we also witnessed record losses in the interest-rate sector, which represents 82 percent of the derivatives market: The nation’s banks lost $3.4 billion in interest-rate derivatives, or more than seven times their worst previous quarterly loss in this category.

http://blogs.moneyandmarkets.com/mar...k-wells-fargo/

[Slimprofits]

Re: Results of the test of 19 banks

OCC's Quarterly Reports on Bank Derivatives Activities:

http://www.occ.gov/deriv/deriv.htm

Fourth quarter 2008:

http://www.occ.gov/ftp/release/2009-34a.pdf

Net current credit exposure (NCCE) for U.S. commercial banks increased $364 billion, or 84% in the fourth quarter to a record $800 billion. Net current credit exposure is 159% higher than the $309 billion in the fourth quarter of 2007. Gross positive fair values (derivatives receivables) increased $4,328 billion in the quarter. Legally enforceable bilateral netting agreements allowed banks to reduce the gross credit exposure of $7,100 billion by 88.7% to $800 billion in net current credit exposure.

The second step in evaluating credit risk involves an estimation of how much the value of a given derivative contract might change in the bank’s favor over the remaining life of the contract; this is referred to as the “potential future exposure” (PFE). PFE decreased 12% in the fourth quarter to $782 billion. The total credit exposure (PFE plus the net current credit exposure) increased from $1.3 trillion in the third quarter of 2008 to $1.6 trillion in the fourth quarter.

*****

The OCC played a role in this farce. I wonder if some people over there are feeling used this morning?

[thunderdownunder]

Re: Results of the test of 19 banks

You are correct Rant and rave it should have been................................
and with the kindest regards Chris read between the lines. Your stress tests tell me nothing. There is an International standard for bank stress tests called Basel ii. Look it up !!It has nothing to do with "worst cases" its an acid test that can't be fiddled with puffery and leaves little to chance. From memory the US signed finally in the last two years but it was ignored. My little "rant" is a snippet of real life (fictional except for GMAC as that happened to me today).

What is real about it is that you and a lot of others want to know where this all ends - let me tell you a truth -its when you no longer exist (not you personally)because all that comes before it is "noise". I'm personally sick of being lied to by people who are trying

[Chris Coles]

Re: Results of the test of 19 banks

Thunderdownunder, they are not my stress tests, they are the errent child of the Federal Reserve and the Treasury and all presented to provoke constructive debate about the veracity of the information they have supplied. If you know about something called Basel ii then share it in detail so that we can all understand what you are telling us.

As for the lies you say we are being told by the authorities, for heavens sake, what was all your rubbish if it was not the same thing? Get real, this is serious stuff here....

[GRG55]

Re: Results of the test of 19 banks

http://roomfordebate.blogs.nytimes.c...ess-test/#yves

Yves Smith:

But the stress tests fell far short of the needed level of review. First, they were administered by the industry based on scenarios provided by the industry. Most observers found the “adverse” case to be too optimistic. Even worse, banks got to use their own risk models, the same ones that got them into trouble. And there was no independent verification of the quality of the accounting. The number of examiners per bank was well short of what you’d need to probe a single business, much less an entire firm.

Second, the industry got to negotiate the results. This is simply unheard of. That suggests both a lack of confidence in the process and a lack of belief on the part of the key actors (Treasury Secretary Timothy Geithner, in particular) that the government needs to set the parameters and demand compliance.

If the industry got to "negotiate the results" then Ken Lewis and Bank of America must be the absolute worst "negotiators" on earth. Who could feel good about negotiating a $33 B shortfall? :rolleyes:

No wonder they have a reputation for making one stupid takeover deal after another...starting well before Countrywide.