Hangmans Noose for the Banks

[thunderdownunder]

Borrowing short term to lend long term is not a problem even at Tier 1 ratios of $20out : $1 reserve, just as long as the Principal & interest that comes in is more than the cost of loans that support it. There is a margin of profit 2-4% after all.
But when this happens, well it is a Noose of cost / income and it is tightening and choking of the Banks ability to live and to lend.

http://www.bloomberg.com/apps/news?p...d=aTTT9jivRIWE


Now its becoming apparent that these increasing defaults and the subsequent (unmentioned) decreasing limited lending ability of strangled Banks are adding up to a pandemic of falling dominoes as they are all intertwined.
EJ should do a comment on the "domino effect"
based on this effort
http://vodpod.com/watch/1975292-funn...minoes-falling

[FRED]

Re: Hangmans Noose for the Banks

Borrowing short term to lend long term is not a problem even at Tier 1 ratios of $20out : $1 reserve, just as long as the Principal & interest that comes in is more than the cost of loans that support it. There is a margin of profit 2-4% after all.
But when this happens, well it is a Noose of cost / income and it is tightening and choking of the Banks ability to live and to lend.

http://www.bloomberg.com/apps/news?p...d=aTTT9jivRIWE


Now its becoming apparent that these increasing defaults and the subsequent (unmentioned) decreasing limited lending ability of strangled Banks are adding up to a pandemic of falling dominoes as they are all intertwined.
EJ should do a comment on the "domino effect"
based on this effort
http://vodpod.com/watch/1975292-funn...minoes-falling

From our analysis comparing the 1990/1991 banking crisis to the one that is developing.

1990/1991 Banking Crisis
1) Non-performing loans were diverged by size of bank. The biggest banks had the largest problems.
2) The four bank classifications by size experienced non-performing loans in a wide distribution from 2.7% to 5.7%
3) Bank performance did not deteriorate through the 1990 recession at the same time

2008/2011 Banking Crisis
1) Non-performing loans do not diverge by size of bank. All banks are experiencing a rise in non-performing loans.
2) The four bank classifications by size experienced non-performing loans in a narrow distribution clustered between 3% to 3.9% as of Q1 2009.
3) Bank performance is deteriorating through the depression in near lock step.

We estimate banks will continue to fail through the end of 2011, that more than 1,000 will fail, representing a total asset loss of $890B, based on RBS estimates, information from contacts at the FDIC, and our own calculations.

[rabot10]

Re: Hangmans Noose for the Banks

From our analysis comparing the 1990/1991 banking crisis to the one that is developing.

1990/1991 Banking Crisis
1) Non-performing loans were diverged by size of bank. The biggest banks had the largest problems.
2) The four bank classifications by size experienced non-performing loans in a wide distribution from 2.7% to 5.7%
3) Bank performance did not deteriorate through the 1990 recession at the same time

2008/2011 Banking Crisis
1) Non-performing loans do not diverge by size of bank. All banks are experiencing a rise in non-performing loans.
2) The four bank classifications by size experienced non-performing loans in a narrow distribution clustered between 3% to 3.9% as of Q1 2009.
3) Bank performance is deteriorating through the depression in near lock step.

We estimate banks will continue to fail through the end of 2011, that more than 1,000 will fail, representing a total asset loss of $890B, based on RBS estimates, information from contacts at the FDIC, and our own calculations.

Fred give me a read on B of A