Mixed Messages to Banks: Lend More *smack* Raise More Capital *smack* Lend More *smack* Raise More Capital…
Poor Bastards. It’s like Chinatown out there.
WOTS now is they will give BofA and CITI 30 days to dump Ken Lewis and Vikram Pandit and find more TOTUS Approved CEOs
Like Jamie Dimon who Obama seems to like thus JP Morgan Chase escaped the Naughty List of baaaad banks Timmeh put together….and Capital One of all people gets off with no more capital, how the hell is that possible with the charge offs rising??
Well we know how Chinatown ended..
Forget it Jake, it’s TOTUS-Town
Fri. Apr. 24 2009 | 4:29 PM ET
Discussing the bank stress tests and more, with Robert McTeer, fmr. Dallas Fed Bank president; Bill Isaac, Secura Group of LECG; and CNBC’s Larry Kudlow
The cheese stands alone…but who is the cheese? DOW futures are down sharply, 141…
I say it’s CITI, any takers? The notion that our entire banking system is infected with TARP b/c Paulson and Geithner wanted to shield CITI by injecting capital into everyone, and now CITI is still a problem, if it is indeed CITI, well it sucks….
…if only the REGULATOR of CITI back then had KNOWN… who was that masked man? it was Geithner in NY as head of the NY FED…..
CITI CEO Vikram Pandit, who has been cooperating like crazy, even agreeing to cramdowns with Durbin…well WOTS is his head will roll as the sacrificial lamb…yet Dick Parsons somehow got promoted out of it, this after he presided over the TimeWarner stock tanking, go figure…
One of the 19 financial institutions that received a government stress test would require additional capital, based on the initial findings, according to an industry source…Though the source did not identify the company, the government in its report Friday said results were “conveyed” to the participating firms at the end of April, so the bank in question would be aware of the Federal Reserve’s assessment….
…Banks found to have inadequate capital, will have six months to raise the money, through a variety of means in the private sector. If unsuccessful, the government has said the institutions will be eligible for a capital infusion through its Capital Access Program….
“There are two things that are terribly wrong,” former FDIC Chairman Bill Isaac told CNBC.com. “First, that was publicly announced. I can’t imagine what Treasury was thinking when it made that move. It has been causing incredible angst in the markets … The second big problem is that the Treasury is directing the stress testing, apparently with direct involvement of the White House at the highest levels. Bank regulation by law is supposed to be carried out by the independent banking agencies without any political interference.”..
Update: From WSJ:
For release at 2:00 p.m. EDT
A white paper describing the process and methodologies employed by the federal banking supervisory agencies in their forward-looking capital assessment of large U.S. bank holding companies was published on Friday.
The white paper is intended to assist analysts and other interested members of the public in understanding the results of the Supervisory Capital Assessment Program, expected to be released in early May. All U.S. bank holding companies with year-end 2008 assets exceeding $100 billion were required to participate in the assessment, which began February 25. These institutions collectively hold two-thirds of the assets and more than half the loans in the U.S. banking system.
More than 150 examiners, supervisors and economists from the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation participated in this supervisory process. Starting from two economic scenarios–a consensus estimate of private-sector forecasters and an economic situation more severe than is generally anticipated–they developed a range of loss estimates and conducted an in-depth review of the banks’ lending portfolios, investment portfolios and trading-related exposures, and revenue opportunities. In doing so, they examined bank data and loss projections, compared loss projections across firms, and developed independent benchmarks against which to evaluate the banks’ estimates. From this analysis, supervisors determined the capital buffer needed to ensure that the firms would remain appropriately capitalized at the end of 2010 if the economy proves weaker than expected.
Released now, the parameters were apparently already out there, they used Case Shiller Housing Value Futures in their projections…CITI already tested itself against that same metric…
they are not giving the Tangible Common Equity number they want from the banks is it 3%? 4%? and they are also not giving out the specific projected losses or the size of the capital buffer the regulators want…..meanwhile the NY Post is reporting Vikram Pandit is out as CITI CEO shortly….
They gave the categories of loans they looked at and the counterparty risk but not the other parameters, reporters asked on the conference call…..
Will get up the CNBC clip as soon as it’s available
It’s managing expectations they say..a whole lotta nothin’ just came out…they Put on the Ritz for us…they don’t want anyone running the numbers before the banks shore up capital..
Next words will be the results of the stress tests on May 4th, I think the banks will begin to leak their own inner results before that..
The markets are turning down now, were up over 100 now up 50 on the Dow….
Live! From New York, NY: Exclusive Interview with Meredith Whitney (Taking Stock)
Between AIG and CITI, damn right they are Zombies, they keep coming back for more…
Citigroup and the U.S. have reached a deal to give the government a bigger stake in the troubled banking giant, by converting its preferential shares to common stock, a Treasury official tells CNBC.
The agreement will see the Treasury’s Citi stake rise to between 30 to 40 percent and in return, the government is demanding a boardroom shakeup. The exact details of this shakeup are not known. However, CEO Vikram Pandit is expected to keep his job under the agreement.
The Treasury official also said the government will be offered the lowest price given to any private investor to convert preferred shares into common equity. The Treasury will match the private investors’ conversions dollar-for-dollar up to $25 billion.
Like Tom (and Stevie!!) says, Hey! Dont Come Around Here No More !!!
Other key details of the Citigroup-U.S. pact remain unclear.
As previously discussed, when comparing Citigroup’s market capitalization with the number of preferred shares the government currently owns, if these shares were converted right now to common stock, they would worth more than 100 percent of Citi’s total market capitalization.
CNBC: Citigroup is in talks with U.S. officials about the federal government taking a larger stake in the troubled institution, according to people familiar with the situation.
The aid would involve a new capital injection that would increase the government’s stake in the troubled bank, but would not constitute nationalization, which has been a major concern for investors.
Sources say bank executives are hoping the govenment stake will top out at about 25 percent, athough it is possible it could be as high as 40 percent. In either case, if the govenment converts its current preferred-stock status to common shares, Citi shareholders would see their stakes diluted and the government would potentially have a much larger influence over Citi.
And yes it would be nationalization, despite the semantics of Team Obama, you just cannot be slightly pregnant:
Any additional money that Citi receives from the government automatically means a further stock dilution. While Obama Administration officials say this isn’t nationalization, markets may interpret the situation differently and see it as de facto nationalization.
The move likely would make the U.S. government the biggest shareholder of Citigroup, owning a majority of its stock. This is de facto government ownership, or nationalization. What this ownership means at this point, nobody knows
What can CITI do? Nothing they are frakked, with the governments giant feet coming down everyplace NO ONE wants to get in front of them, and no private equity will come in as a result….
Citi could also try to raise fresh equity with a public share offering, the Financial Times reported. The aim would be to keep the government stake to no more than 40 percent or at least below 50 percent, it said, citing people familiar with the plan.
Message to Pandit, you don’t sit down to dinner with the Devil and leave the table unscathed my friend…..
I knew Maxine Waters D-CA wouldn’t let me down
Barney Frank D MS, asks them not to foreclose on anyone while we are in the last few weeks before the new mortgage modification plan comes from Geithner
and MiM fave Carolyn Maloney D NY tries to get down to brass tacks on the BofA Merrill Bonus fiasco: