mikeg3

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    • Thu Oct 2nd 14:59 PM
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      Commented on:
      Wachovia for Free? Citi Still Paid Too Much
      If the Wachovia shareholders turn down the Citi merger, they are left with no Fed guarantees and an unsalable, insolvent bank.

      At least the residual Wachovia will be solvent and positioned for success.
      View article »
    • Fri Aug 1st 22:50 PM
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      Probe of Citigroup et al Could Hit Financial ETFs
      It's amazing how NY Attorneys General run for Governor by trashing major employers.

      Can you imagine the Governor of Michigan suing Ford or the Governator of California suing Disney?

      No one expected these auctions to fail, but hindsight is a wonderful thing.
      View article »
    • Fri Aug 1st 09:05 AM
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      Large Banks' Net Income History
      Please explain the headings FY1, FY2, and FY3.
      View article »
    • Sun Jul 27th 19:56 PM
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      Banking Sector: Band-Aids Just Won't Do It
      My understanding is that a lot of GSE stock is held by other financial institutions. Wipe out the stock and the banks, etc., take a big write-off (not just a write-down) and need to raise more capital at a bad time.

      Of course the shorts writing for Seeking Alpha will be thrilled.
      View article »
    • Sun Jul 20th 11:41 AM
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      Earnings Season: Fundamentally Flawed
      There is something strange about this web site.
      With 100 million Citigroup shares traded daily between willing sellers and willing buyers, there should be plenty of credible commentators on both the bull and bear side. Yet Seeking Alpha only seems to publish bearish writers, many with stated short positions.
      Is this site just a short-sellers' propaganda vehicle?
      My own take on how to evaluate Citi, in which I am long, is that we need to examine Pandit's stated integrated banking model (Mexico) to see if it works there, than decide if that model can really be globaliized. We need to evaluate whether Citi is driving their toxic exposure down. We need to see if Citi is on track cutting costs. We need to watch the disposal of non-core assets (right assets?, good price?, on schedule?). Finally we need to decide if Citi will survive until home prices stabilize and the economy turns up (I am sure of it).
      I am bullish on Citi two years out, but it's going to be a wild ride.
      View article »
    • Wed Jul 16th 13:24 PM
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      Is the SEC 'Rumorgate' Push a Waste of Time?
      As the story at pelican's link shows, IM messages are in fact logged. The example message in the story begins "I just got off the phone with my guy at SAC. ". If the was no such phone call, I guess we're talking about fraud.
      View article »
    • Thu Jul 3rd 15:39 PM
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      FAS 157: Blackstone and Its Banker Buddies Have It Wrong
      Not all valuable financial assets are liquid. Many are expected to be held to maturity. Think of CD's, worth much less if cashed in early.

      I believe that banks should be allowed to account for CDO's by treating them as portfolios of individual mortgages. Mortgages are valued as discounted cash flows, less reserves for expected losses.

      If a portfolio is expected to foreclose half the mortgages (a high number even in Vegas), and the forclosure will return half the principal plus accrued interest of the loans (a number widely accepted), then the CDO is worth 75% of face value. Since a super senior tranche gets the first 85% of recoveries, that means the bank's piece is worth 88% of face value.

      FAS 157 was created in response to a problem where Japanese banks were refusing to recognize losses on commercial real estate in the 1990's, leaving little lending power and stagnating their economy. US banks must reserve for expected losses, so there is no point in not foreclosing when a loan stops performing.

      With CDO's characterized as "toxic", the market is not objective but emotional. Pricing CDO's based on a few bottom-fishing transactions simply drains reserves and requires equity dilution.

      The rules for accounting for direct loans are well understood by everyone. They should be applied to the mortgages underlying CDO's.

      BTW, leverage does not apply to super senior tranches. They were constructed and retained by the banks, not purchased on margin. If they were, the margin would have been called a year ago.
      View article »
    • Mon Jun 30th 06:33 AM
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      Is Citi's Vikram Pandit a Robot?
      The wsj is not the NY Post. Everyone else understood that Pandit was saying that institutions with Fed protection should be subject to Fed regulations and that off-exchange trading needs more transparency. Sorry it went over your head.
      View article »