Fifty Cent, Yo, Make it A Dime Bag
We commented today on Libor vs Fed Funds Spread.
This chart of the TED spread speaks for itself, from M. Panzner at Financial Armageddon, the largest spike since 1987.
More ominous, banks have much less in the way of cheap immobile customer deposits backing their outstanding loans...
Naked Capitalism has on the latest Etrade bailout, its a dime bag!!
The Etrade portfolio sale was part of a $2.5 billion capital infusion from a group led by hedge fund Citadel investment Group.
Credit Suisse analyst Susan Roth Katzke said on Friday said E*Trade got anywhere from 11 cents to 27 cents on the dollar for its $3.1 billion portfolio of asset-backed securities.
Bear in mind, no pun intended... Katzke made a quick and dirty analysis of what the impact would be if the major Wall Street firms had to mark down their subprime portfolios to the levels implied by the E*Trade investment.
She used 26% of face value. She also made allowance for the writedown previously made. Her conclusions: Merrill would take an additional $9 billion of writedowns. Citigroup an additional $26 billion in writedown.
Note that while Katzke's estimates may be rough, they are also conservative. These are after tax writedowns. She used 26 cents on the dollar, near the very top of the 11 to 27 cent range.
And these values were realized on a portfolio with 70% prime mortgages, while Katzke only marked down Merrill and Citi subprime holdings.
Citigroup investment bank analyst Prashant Bhatia said E*Trade actually received 11 cents on the dollar for its portfolio, if you factor in that the brokerage received $800 million in cash minus 85 million shares it issued.
He said that implies Citadel's received stock compensation worth about $450 million, leaving E*Trade with only $350 million for its $3.1 billion portfolio.
The Nattering One muses... lower customer deposit to loan ratios, in effect a higher LTV ratio, leaving the banks along with the borrower, little room to maneuver.
Debt liquidations now ranging from fifty cents (SIV) to ten cents (subprime based).
Can't wait to see what happens in the underlying asset market (real estate)...
which in the case of bank owned REO is already being discounted 35 to 50 cents on the dollar, when this is said and done.
This chart of the TED spread speaks for itself, from M. Panzner at Financial Armageddon, the largest spike since 1987.
More ominous, banks have much less in the way of cheap immobile customer deposits backing their outstanding loans...
Naked Capitalism has on the latest Etrade bailout, its a dime bag!!
The Etrade portfolio sale was part of a $2.5 billion capital infusion from a group led by hedge fund Citadel investment Group.
Credit Suisse analyst Susan Roth Katzke said on Friday said E*Trade got anywhere from 11 cents to 27 cents on the dollar for its $3.1 billion portfolio of asset-backed securities.
Bear in mind, no pun intended... Katzke made a quick and dirty analysis of what the impact would be if the major Wall Street firms had to mark down their subprime portfolios to the levels implied by the E*Trade investment.
She used 26% of face value. She also made allowance for the writedown previously made. Her conclusions: Merrill would take an additional $9 billion of writedowns. Citigroup an additional $26 billion in writedown.
Note that while Katzke's estimates may be rough, they are also conservative. These are after tax writedowns. She used 26 cents on the dollar, near the very top of the 11 to 27 cent range.
And these values were realized on a portfolio with 70% prime mortgages, while Katzke only marked down Merrill and Citi subprime holdings.
Citigroup investment bank analyst Prashant Bhatia said E*Trade actually received 11 cents on the dollar for its portfolio, if you factor in that the brokerage received $800 million in cash minus 85 million shares it issued.
He said that implies Citadel's received stock compensation worth about $450 million, leaving E*Trade with only $350 million for its $3.1 billion portfolio.
The Nattering One muses... lower customer deposit to loan ratios, in effect a higher LTV ratio, leaving the banks along with the borrower, little room to maneuver.
Debt liquidations now ranging from fifty cents (SIV) to ten cents (subprime based).
Can't wait to see what happens in the underlying asset market (real estate)...
which in the case of bank owned REO is already being discounted 35 to 50 cents on the dollar, when this is said and done.
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