Continuing with more data related to Kmguru's post 818:
"... Mortgage woes are spreading to other types of loans as the economy weakens and unemployment rises, producing a secondary pressure trend hitting bank earnings, experts said this week, …
Higher provisions to cover rising losses on consumer loans will likely eat into bank profits in the fourth quarter and beyond. That may squeeze the capital cushions of some banks that already have taken write-downs in the tens of billions of dollars because of exposure to mortgage-related securities. …
Until the middle of last year, consumer loan losses were held in check as house prices climbed, allowing borrowers refinance mortgages or take out home-equity loans and use the cash to pay off credit card bills and auto loans. But as the subprime-fueled credit crisis erupted in August, such activity ground to a halt.
{Billy T comment: Table below of already announced Bankers' write-downs for 16 top financial firms
totaling $72.3 billon dollars MORE (AFTER THIRD QUATER'S EARLIER LOSSES) Citygroup will announce fourth quarter's write downs on 15 Jan 08. They are expected to be about 10 billion more. By end of January, when others have also announced Q4 write downs, we should be looking at $0.1 TRILLION dollars of losses since Q3 of 2007 !!!!}:
UBS $13.7 bln
Citigroup *$13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America *$3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Bros. $0.8 bln
Zach Gast, Center for Financial Research and Analysis:
“Since then, credit card and auto loan delinquencies have begun to rise and will probably deteriorate further. The surprise is that that it took this long for the consumer to start struggling," he added.
John McDonald, an analyst at Banc of America Securities:
"Recent signs of economic weakness could lead to deterioration in other loan classes that have so far held up well, such as commercial, non-residential components of commercial real estate and credit cards,"
American Express, AXP, shares slumped more than 10% on Friday after the credit-card giant said it was forced to record a $440 million, fourth-quarter charge to cover the cost of increased delinquencies and loan write-offs. … Another big credit card company slashed its profit forecast on Thursday for similar reasons.
The delinquency rate on banks' consumer loans, which include credit cards and auto loans, rose to almost 2.5% during the third quarter, from less than 2% at the start of 2007, according to CFRA data. Gast expects that to rise in the fourth quarter and keep climbing in 2008.
As loan losses climb, banks will have to put more money into reserves. Such provisioning will whittle away at banks' capital, adding another strain to the big write-downs that investors are already expecting. …"
{Billy T comment: Nothing to worry about. :bravo:-
The "good news" is that A&A will save US financial system from immediate collapse. "A&A" = Arabs and Asians. :yay: My long standing prediction is that the collapse comes between Oct 2008 and Oct 2014. Sure hope GWB gets the credit for it he so well deserves. GWB made collapse unavoidable in only 7 years by wars, doubling the debt, and a failed "serve the rich" tax policy.}
From:
http://www.marketwatch.com/News/Story/Story.aspx?guid={2E530903-6EAE-43CB-8C18-816A5F9B70C8}
DON'T WORRY SANDY. Gold and price of oil will keep going up as the value of the dollar falls.
