Mayo Says Loan Losses Will Exceed Depression Levels

[steven johnson]

Source: Bloomberg

Mike Mayo, who left Deutsche Bank AG last month and joined CLSA, assigned an “underweight” rating to U.S. banks and predicted loan losses will exceed levels from the Great Depression.

U.S. stocks dropped after Mayo gave “sell” ratings to banks including Winston-Salem, North Carolina-based BB&T Corp. and Cincinnati’s Fifth Third Bancorp. Bank of America Corp. and JPMorgan Chase & Co., the two biggest U.S. banks by assets, were assigned “underperform” ratings, Mayo said in a report today.

“While certain mortgage problems are farther along, other areas are likely to accelerate, reflecting a rolling recession by asset class,” Mayo wrote. “New government actions might not help as much as expected, especially given that loans have been marked down to only 98 cents on the dollar, on average.”

Meredith Whitney, who left Oppenheimer & Co. in February to found Meredith Whitney Advisory Group LLC, said in a Forbes interview that banks will continue to write down their mortgage assets as home prices decline further than lenders expected. The unemployment rate also has exceeded banks’ projections and could lead to further loan losses, Whitney said.



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a1yCkrhVtOks&refer=home

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Most government experts have underplayed the seriousness of the current economic crisis from the beginning. 'Worst case scenerios' from more pessimistic analysts are not reassuring.

[No Elephants]

1. Rec. Not cheerful, is it?

[Barack_America]

2. Soros is saying today that US banks are basically insolvent.

Not anything we haven't heard before, of course, but depressing nonetheless.

[Igel]

3. In that case we won't be able to get the loan we'll be

applying for in a few weeks.

Well, no harm in trying.

[steven johnson]

4. And Martin Weiss says 1,800 banks are at risk of failure

Several of the nation’s largest banks, including JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, plus more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts, according to Martin D. Weiss, Ph.D., president of Weiss Research, Inc., an independent research firm.
The analysis is based on Fourth Quarter 2008 data from TheStreet.Com and the Comptroller of the Currency (OCC).

The FDIC’s “Problem List” of troubled banks includes 252 institutions with assets of $159 billion. The updated review by Weiss Research, however, shows that 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.

Weiss predicted the demise of Bear Stearns 102 days prior to its failure, Lehman Brothers (182 days prior), Fannie Mae (eight years prior), and Citigroup (110 days prior)


http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20090406006133&newsLang=en

[Barack_America]

5. Ah, so that's the report that tanked the bank stocks today.

On the other hand, sales for each of the Big 3 were better than expected last month and some analysts are claiming that the "worst may be over" for that industry.

Goes to show you which industry still has value and which doesn't, eh?