Saturday, January 17, 2009

How to lose a trillion dollars-call your banker

Since May of 2007, this is how much shareholders in these companies have lost.

Citi $253 billion
AIG $169 billion
Bank of America $177 billion
JPMorgan $88 billion
Morgan Stanley $77 billion
Goldman Sachs $67 billion
Wells Fargo $62 billion
American Express $57 billion
Prudential $37 billion
Hartford Investment Group $31 billion
Metropolitan Life $29 billion
Suntrust $25 billion
Capital One $24 billion

But look at today's Barron's:

The knowledgeable folks at ISI Group, who sedulously strive to err on the side of conservatism in their assays, reckon that the top four banks alone have something like $1.2 trillion in bad assets, a fearsome figure that swells to perhaps $2.4 trillion for the industry as a whole.

It took 20 months for shareholders to lose the first trillion. Unless the "asset aggregator" or the so called "good bank bad bank" gets up and running, the next trillion of losses will happen at a markedly faster pace.

Which means that even the "fiction of the fortress" that supposedly exists at JP Morgan will be found wanting.


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