Tuesday, May 19, 2009

WSJ on bank losses

I'll save you the trouble of reading 100 bearish blogs, because they'll all lead with this story in the WSJ:

Commercial real-estate loans could generate losses of $100 billion by the end of next year at more than 900 small and midsize U.S. banks if the economy's woes deepen, according to an analysis by The Wall Street Journal.

Such loans, which fund the construction of shopping malls, office buildings, apartment complexes and hotels, could account for nearly half the losses at the banks analyzed by the Journal, consuming capital that is an essential cushion against bad loans.

Total losses at those banks could surpass $200 billion over that period, according to the Journal's analysis, which utilized the same worst-case scenario the federal government used in its recent stress tests of 19 large banks. Under that scenario, more than 600 small and midsize banks could see their capital shrink to levels that usually are considered worrisome by federal regulators. The potential losses could exceed revenue over that period at nearly all the banks analyzed by the Journal.


You can read the paper, or you can read a chart. Which one will make you money?

If the WSJ story is true, then why, are the Markit indexes for commercial mortgage backed securities rocking?


Anonymous said...

Where do you see the financials going over the next month?

Palmoni said...

I'll give you what I like for the next few days--BAC.

Anonymous said...

where do you see bac goin gthe next few days?

is it a buy tomorrow morning?

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