Write it Down, Write it Down
As Nattered Aug 22nd in Caveat Emptor Part I and II regarding FASB #157 reporting of subjective Level 3 income:
"What will they do if $550 Billion of maturing ABCP doesn't sell in the next 90 to 120 days? And what of the $400 Billion already trapped in the pipeline?
Making $1 Trillion in ABCP on the books or being sold at discount? Which will cause failures.
And what will the FDIC; insurer of $11 Trillion+ in thrift, loan & banking assets do as the failures mount?"
As Nattered Oct 10th in The Worst Is Yet To Come: "Valuations for Level 3 assets... (mark to fantasy or model, rather than market)...
are set not by market prices but internal calculations. In other words, the prices of Level 3 assets are completely subjective rather than objective.
Valuations for Level 2 assets, where there may be market activity, but valuations often depend on internal valuation models in the absence of quoted prices...
What will writedowns look like? Even the most solvent of institutions... such as Bank of America. Level 3 assets at Bank of America = $21.6 billion.
Level 2 assets at Bank Of America = $609 billion. Only $64 billion of Bank of America's assets fall into Level 1...
where valuations are set by quoted prices or mark to market.
Today, CNBC commentator's commented that Lehman Brothers may potentially have a $3.9 billion write-down.
Capital One Financial Corp. stock dropped 16%, the largest drop since October 2002.
The biggest independent U.S. credit-card issuer said its cost for bad debts tied to mortgages and credit cards will be worse than predicted.
Charge-offs may range from $4.9 billion to "the mid $5 billions."
American Express Co. and other U.S. credit-card issuers may be forced to revise their loss estimates after Capital One boosted its forecast.
Do I hear $50 Billion??
Deutsche Bank analyst Mike Mayo said on CNBC that he is now projecting over $50 billion of write-downs in banks/brokers in the second half of the year.
Do I hear $100 Billion??
Bloomberg reports that U.S. banks and brokers face as much as $100 billion of write down's because of Level 3 accounting rules which go into effect Nov 15th.
Will anyone give me $500 Billion?
Royal Bank of Scotland Group chief credit strategist Bob Janjuah: "This credit crisis, when all is out, will see $250 billion to $500 billion of losses."
SOLD!!! To the man in green plaid kilt!
"What will they do if $550 Billion of maturing ABCP doesn't sell in the next 90 to 120 days? And what of the $400 Billion already trapped in the pipeline?
Making $1 Trillion in ABCP on the books or being sold at discount? Which will cause failures.
And what will the FDIC; insurer of $11 Trillion+ in thrift, loan & banking assets do as the failures mount?"
As Nattered Oct 10th in The Worst Is Yet To Come: "Valuations for Level 3 assets... (mark to fantasy or model, rather than market)...
are set not by market prices but internal calculations. In other words, the prices of Level 3 assets are completely subjective rather than objective.
Valuations for Level 2 assets, where there may be market activity, but valuations often depend on internal valuation models in the absence of quoted prices...
What will writedowns look like? Even the most solvent of institutions... such as Bank of America. Level 3 assets at Bank of America = $21.6 billion.
Level 2 assets at Bank Of America = $609 billion. Only $64 billion of Bank of America's assets fall into Level 1...
where valuations are set by quoted prices or mark to market.
Today, CNBC commentator's commented that Lehman Brothers may potentially have a $3.9 billion write-down.
Capital One Financial Corp. stock dropped 16%, the largest drop since October 2002.
The biggest independent U.S. credit-card issuer said its cost for bad debts tied to mortgages and credit cards will be worse than predicted.
Charge-offs may range from $4.9 billion to "the mid $5 billions."
American Express Co. and other U.S. credit-card issuers may be forced to revise their loss estimates after Capital One boosted its forecast.
Do I hear $50 Billion??
Deutsche Bank analyst Mike Mayo said on CNBC that he is now projecting over $50 billion of write-downs in banks/brokers in the second half of the year.
Do I hear $100 Billion??
Bloomberg reports that U.S. banks and brokers face as much as $100 billion of write down's because of Level 3 accounting rules which go into effect Nov 15th.
Will anyone give me $500 Billion?
Royal Bank of Scotland Group chief credit strategist Bob Janjuah: "This credit crisis, when all is out, will see $250 billion to $500 billion of losses."
SOLD!!! To the man in green plaid kilt!
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