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Banks Behaving As If 'It' Never Happened
Today's Quarterly FDIC data release was cheered by many on the basis that US banks made the most money ever ($40.6bn) in Q1 which must mean something positive, right? With rates low, spreads low, margin high, and collateral in short supply, where all these profits coming from? The following chart, which may make some nauseous in its simple and direct clarification of just how blind we have become to what is going on, has the answer. Simply put, bank earninsg have soared on the back of nothing less than a total collapse in loan loss provisions (LLPs). In fact, LLPs are now at their lowest levels since the peak of the housing bubble (and as we showed yesterday here and here, a bubble this is) - at a level of reserves that suggest the banks believe 'It' never happened. The delusion continues...
Of course, why would the banks reserve against loan losses? The Fed has their back - if not the Fed, then the Treasury... still think these are fortress balance sheets? Well,
...and capital ratios are rolling over...
Charts: FDIC
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"Mark to fantasy", nothing more.
`'Tis a Financial Depression,' I muttered, `tapping at my chamber door -
Only this, and nothing more.'
Quoth the Raven "QE EVERMORE!"
Quoth the Maven....
Banks made the most ever?
More like banks "stole" the most ever.
That's certainly something to be proud of.
Meh.
Why should the banks give a shit? They get bailed out regardless, and the sheep keep obeying, not matter what happens.They don't know how to do anything else.
The banks and guvs have to reason to change anything.
they sold all the shit mbs to us the tax payer and used that money to buy stocks and bonds.
that system of the fed's smells like treason...and slavery for our children.
"It" happened only if you believe it happened.
Many prefer living in denial. Ask the stock market.
they sold all the shit mbs to us the tax payer and used that money to buy stocks and bonds.
Ummm... no. They didn't. First the FED only "bought" SOME of the MBS's. Second they didn't pay for them, but rather gave the banks a "credit" to the bank's "reserve account" at the Fed. Thus no money was created, none spent - by anyone. Not a dime came from the tax payers since it was all make-believe money - just entries on an electronic ledger that enabled the banks (who "sold" the MBS's) to count the reserve deposits as "interest bearing assets" which thus had a certain valuation, which allowed the banks to count them/the deposits on their balance sheets as cash equivalents, and to PASS THE STRESS TESTS that the FED administers. If the banks did not pass the stress tests (which they wouldn't have), they would be declared insolvent and closed down. With the "sales" of the certs to the FED, they passed and could continue in "business."
There you are - the how, the what, and the why, all in one paragraph.
As to the buying of stocks and bonds, that would be a separate deal(s) and "new money" would be 'created' for that.
LLP, like CPI, has been redefined under the Osama admin, with Bernocchio and Timmy "I don't pay taxes" Jeethner manipulating financial markets. There is only one word that fits our current economic situation - PONZI.
PM's are continually slammed because it is the ant-USD vote. Bitcoin, ditto. The putrid rot that permeates from our leaders is truly sickening. Fuck'em all.... if I found them on the street in need of help, I'd piss on them and that's it.
if their guts were on fire would you still do that?
Only after consuming a fifth of Jack Daniels.
the day they are sussed out of their mansions and in need will be the day they get a piss shower and an understanding of what the real world is all about. call it jungle life and they wouldn't make thru the first night - die of fright.. food for the dogs.
Or, imagination, the greatest nation of them all.
president's economic tzar (Furman right now) has the LEGAL POWER to allow fake finantial reports for any corporate he chooses.
It's been happening with banks it's been 10-15 years.
Laws are legal.
"Laws are legal"
so true ...and as history shows, the rise in Law paralels the rise in anarchy by the establishment and, get this, the demise of society itself
the "Rule of Law" all signed off as 'legal' by lawyers, judges and Depts of Justice (cough) and buried same time as society in an open grave
Law, lawyers and lawmakers 200BC - 2020 RIP
"IT" didn't happen to them. Why worry?
A lie is not a lie, IF you believe it
A truth is not a truth unless we force feed it to you said every .gov ever.
.... AAAAWKWAAARD
Dick Bove said the jpm will out earn apple and chevron too. I guess his detailed analysis failed to account for loan loss provision stripping that can't go on forever. LMAO!
http://finance.yahoo.com/blogs/talking-numbers/bank-could-profitable-app...
http://finance.yahoo.com/blogs/talking-numbers/bove-best-strategy-money-...
GENERATIONAL BUY BITCHEZ!
Dick Bove has a set of kneepads ready for any bankster that needs servicing.
Banks on fire ... no seriously, break out the torches ...
To paraphrase Dubbya, "Smoke em out, bring em to justice".
While this is not going to happen, they will inevitably blow themselves up, yet again.
Yea, and the gov. won't be able to bail them out. It will be purely a FED led bail. That means massive inflation.
Good thing they'll be "bailed in," then.
Motherfucker!!!!!!!??????? If you can borrow money at 0.25% and lend it out at 10%+ how can you possibly have as many problems as our banking system has?????!!! The mafia, walmart, or a reasonably astute 5-10 year old all could do better than our banksters who are running the country, provided only that they were inculcated with an aversion to the sin of greed.
interest on borrowed reserves too. Lend me a cool trillion and pay me .25% too bitchez!
Because, thanks to all of those bubbles, there are NO productive uses remaining. Everything is now sub-marginal thanks to the total financialization of the economy.
It's not only sucked all of the air out of the bag, it's sucked all of the BAG out of the bag!
Because they still have to pay the income streams on the phantom RMBS regardless.
This is where levering up 10 to 42 times bites them in the ass.
By leverage I mean multiple fraudulent sales of the same promissory notes.
Not even Ben can buy up that toxic shit fast enough to get them off the hook.,but he is
trying his very best.
Hey, how about some violent whipsawing of the markets? Now that the poor little retail investor has put his/her meager 401K money in, it's time to shaft em again. Even 3 dollar bills aren't as phony as this stock market.
Where are deposits?
deposits are a liability. fuck yer deposits, we don't need 'em.
I thought losses were banned under Bernanke so why account for them?
BREAKING NEWS,
'Banker Caught Raping Prostitute In Broad Daylight'
UPDATE,
'Prostitute Could Have Recieved Far Better Rate On Mortgage Refinace At Nationwide'
BANKER,
'Unrepentant At Rape Rate'
And the fucking beat goes on.
Bitchez......
Rape a prostitute? I think you mean "theft of services."
Just for the helluvit I searched it up:
'Man to plead guilty to raping our prostitutes'
http://www.springfieldnewssun.com/news/news/crime-law/man-to-plead-guilt...
I've heard of cheapskates, but this guy...
Based on Tylers delinquent loan rate chart, the rate stood just above .5% and rose to 5.5% during the GFC. The current delinquency rate stands @ 3.5%. When round two of the meltdown comes, does that imply a minimum of 8.5% delinquent loan rate? (based on the previous 5% rise)
That will truly be a Teotwawki moment.
Nope, they'll just take more loans against the class of 2525. If man is still alive...
............if woman can survive.......
Loved that song growing up.
https://www.youtube.com/watch?v=izQB2-Kmiic
Who needs a loan loss provision when the Fed is happy to swap out your toxic "assets" for freshly minted liquidity? This is the mother of all ruses.
The fed's balance sheet should be a lot higher. They have been stuffing the sausage with the stinky stuff.
JEEZ Tyler, all these facts... first real estate bill of health and now the banks. Hasn't anybody told you that the only thing that matters is "sentiment"? Yes, that's right, no fundamentals, no Fed Tapering or continued easing.... because so many are negative on the market, that alone is all that should matter. Just ask Holland, Paulson, et al. (Sarc)
Banks reporting record profits while making fewer loans with lower margins.
Yea, that makes sense. Nothing suspicious about that at all. And that hooker on the corner really is working her way through a PhD in social studies too.
What time is the 3:30 ramp today Tyler?
probably a good time for those Blackrock guys to unload their 26000 spec homes
What difference does it make...! The S&P is up to 1650. You are wealthier, you can buy a new car with no money down, you can buy a house at b3.75% mortgage, you can get a college loan for 4 years... don't worry be happy....
My guess is that most "so called" bank profits are "mark to market" gains. They include them when convenient and exclude them when not.
IT ... what is IT?
IT is the greatest financial fraud of all time.
What happened?
A) Big Banks have made a ton of money financing and refinancing homes. They package and sell those mortgages in the secondary market...aka Fannie Mae and Freddie Mac. Additionally, the big banks have created swaps which again is making them tons of money. The smaller banks on the other hand are still recovering from the 2008 downturn but the smalls are under the same scrutiny of the Fed as the bigs and they don't have the horsepower to create derivatives and swaps. Solution: Bring Back Glass Steagall......separate investments from Banking.
B) New regulations in home lending begin 1/1/14. These regulations, part of Dodd Frank, will virtually shut down Home Equity Financing in this country. That coupled with Obamacare will bring the nation to the day of reckoning. My guess is we're about 12 months away. Solution: Buckle in.
The "solution" to A is simple; JPM, Citi, GS, WF and BofA will consume all smaller banks in an effort to stay afloat.
As for B... well, I don't think breaking the home equity ATM is necessarily a bad thing. Sure, it's too late to matter, but that's how CONgress always rolls. What I wonder is how will it affect Fannie's (et al.) >90% mortgage origination market share.
With Dodd-Frank the TBTF banks are well-protected--why reserve against bad loans when you have it in statute that Uncle Sugar will take care of you?
A contrarian thought: banks are making so much money and are desperate to invest it in the "real" economy, but cannot due to lack of organic growth, and are getting internally really worried about this.
Source: a friend who has been at the top of one of the top 5 Banks in the world in their Investment division for >7 years quit recently. A lot of shitty politics was involved (seriously: when you make the largest % profit, but get shafted for bonuses to favor your bosses' pets, then your boss is a fucking tool, and not even playing the Game by the rules), but when you're chasing Alpha and there's none to be had...
It's now a matter of who is left holding the bag.