Tag Archives: bank failures

How many loans must a bank have go bad, before it is washed to the sea?

Says here that 5% is the magic number and there are at least 150 banks with bad loans at that level or higher. The article says that all those banks report that they’re “well capitalized”. Go figure. While you’re figuring, anyone know Patriot Bank’s level?

UPDATE: Looks like Patriot is at 16%. That can’t be good.

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Will Citigroup fall this weekend?

Maybe. This Bloomberg article doesn’t seem very positive about the company’s prospects.

Jan. 17 (Bloomberg) — Citigroup Inc. shareholders aren’t buying Vikram Pandit’s attempt to salvage the bank by splitting it in two. Nor are they buying the stock.

Citigroup shares tumbled to a 16-year low on Jan. 16 after Pandit, the U.S. bank’s 52-year-old chief executive officer, said he would undo a decade of acquisitions by separating the bank into two units, Citicorp and Citi Holdings.

The problem: Nothing — not $45 billion of U.S. government funds, not federal guarantees on $301 billion of debt, not a pledge to dump non-core assets — can stave off the worst financial crisis since the Great Depression. Already crippled by trading losses on mortgage bonds, the bank faces credit-card losses that surged to a record in the fourth quarter.

“The losses from the investment banking businesses wiped out any margin for error that Citi might have had to be able to weather the storm of the U.S. consumer defaulting on his debts,” said James Ellman, president of San Francisco-based money manager Seacliff Capital LLC.

After initially rallying 17 percent yesterday on news of Pandit’s planned reorganization, Citigroup shares fell, closing down almost 9 percent at $3.50. At that level, it’s below the $3.77 it dropped to on Nov. 21, when the bank entered talks with officials from the U.S. Treasury Department and Federal Reserve over a second round of rescue funds.

They say Citi’s too big to let fail, but hasn’t it already done that? 

Citigroup Chief Financial Officer Gary Crittenden said In an interview yesterday that the bank has had “no conversations at all about additional capital from the government.”

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