Comments on: Bondholder Haircuts at Citigroup: At the End of Q1, the Children’s Hour Ends in Washington http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Mon, 22 Mar 2010 07:28:40 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: jimmy smith http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145719 jimmy smith Fri, 13 Feb 2009 16:16:14 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145719 Exactly. Now they have a greater % of their assets funded by (very cheap and stable) deposits, vs. having to access the debt markets. JPM has been fairly unscathed thus far and expected, by everybody, to inherit the keys to the kingdom. Are the people saying this doing research or just watching the stock price and trying to catch the bottom? I heard on CNBC a manager say he's buying boat loads of JPM because the market has declared them to be The Winner. Not a lot of research there! I think there might be a lot more behind the scenes activity between Dimon and the gov, given JPM's over-the-counter derivative exchange business. If anything were to happen to that say good by to the global economy. I'm wondering if the gov will therefore protect JPM at any cost, even in secret. But, will they have to raise capital due to loan losses coming down the pike, which is going to be costly to current shareholders? Or worse, will they have to be restructured? I guess it depends on how conservative their underwriting was during the credit bubble. Goldman reports that they have only a 2% hit to loans (NPA+90PD/Loans) thus far which is low, and successfully avoided a lot of the toxic asset issues. The other wild card is whether the gov will suspend mark-to-market... Exactly. Now they have a greater % of their assets funded by (very cheap and stable) deposits, vs. having to access the debt markets.

JPM has been fairly unscathed thus far and expected, by everybody, to inherit the keys to the kingdom. Are the people saying this doing research or just watching the stock price and trying to catch the bottom? I heard on CNBC a manager say he’s buying boat loads of JPM because the market has declared them to be The Winner. Not a lot of research there!

I think there might be a lot more behind the scenes activity between Dimon and the gov, given JPM’s over-the-counter derivative exchange business. If anything were to happen to that say good by to the global economy. I’m wondering if the gov will therefore protect JPM at any cost, even in secret.

But, will they have to raise capital due to loan losses coming down the pike, which is going to be costly to current shareholders? Or worse, will they have to be restructured?

I guess it depends on how conservative their underwriting was during the credit bubble. Goldman reports that they have only a 2% hit to loans (NPA+90PD/Loans) thus far which is low, and successfully avoided a lot of the toxic asset issues. The other wild card is whether the gov will suspend mark-to-market…

]]> By: Chris Whalen http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145710 Chris Whalen Fri, 13 Feb 2009 15:36:23 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145710 I put em in this order right now: C, BAC, JPM, WFC. At least Dimon bought WaMu after going through a restructuring! I put em in this order right now: C, BAC, JPM, WFC. At least Dimon bought WaMu after going through a restructuring!

]]> By: johnhaskell http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145705 johnhaskell Fri, 13 Feb 2009 15:30:04 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145705 jimmy smith- ha ha ha ha ha ha! WaMu saved them! oh, you're killing me! jimmy smith-

ha ha ha ha ha ha!

WaMu saved them!

oh, you’re killing me!

]]> By: jimmy smith http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145700 jimmy smith Fri, 13 Feb 2009 15:24:33 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145700 Mr. Whalen, What is your position on JPM currently? I know you thought they were in trouble and would need to enter receivership. Do you still feel that way? Or did the WaMu purchase save them? Thanks! Mr. Whalen,

What is your position on JPM currently? I know you thought they were in trouble and would need to enter receivership. Do you still feel that way? Or did the WaMu purchase save them?

Thanks!

]]> By: Chris Whalen http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145668 Chris Whalen Fri, 13 Feb 2009 14:29:54 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145668 Have of Citi's liabilities are deposits. Other half are in play. :) Have of Citi’s liabilities are deposits. Other half are in play. :)

]]> By: roylat http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145625 roylat Fri, 13 Feb 2009 02:51:28 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145625 I've wondered how much government guarantee of depositors would cost. Might it justify in part the bailout effort? A quick analysis of the numbers in the Citi financial statement (see http://roylat.com, "Guaranteeing Depositors ...) shows that there is almost certainly more than enough to cover all deposits, and certainly more than enough to cover U.S. deposits. US deposits (both time and checking) total only $227 billion. Equity plus long-term debt equals $510 billion. There seems no possibility that losses on loan portfolios could be greater than this cushion. This analysis just adds to the many other arguments made for restructuring rather than bailing out. I’ve wondered how much government guarantee of depositors would cost.

Might it justify in part the bailout effort? A quick analysis of the numbers in the Citi financial statement (see http://roylat.com, “Guaranteeing Depositors …) shows that there is almost certainly more than enough to cover all deposits, and certainly more than enough to cover U.S. deposits.

US deposits (both time and checking) total only $227 billion. Equity plus long-term debt equals $510 billion. There seems no possibility that losses on loan portfolios could be greater than this cushion.

This analysis just adds to the many other arguments made for restructuring rather than bailing out.

]]> By: jritzema http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145545 jritzema Thu, 12 Feb 2009 20:34:57 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145545 Sure, haircut the bondholders, after the equity, hybrid and preferred investors (including TARP CPP) go to zero. Sure, haircut the bondholders, after the equity, hybrid and preferred investors (including TARP CPP) go to zero.

]]> By: leftback http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145497 leftback Thu, 12 Feb 2009 17:44:34 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145497 The triage may finally have begun - let's hope so: http://www.calculatedriskblog.com/2009/02/stress-test-almost-100-regulators-at.html The triage may finally have begun – let’s hope so:

http://www.calculatedriskblog.com/2009/02/stress-test-almost-100-regulators-at.html

]]> By: leftback http://www.ritholtz.com/blog/2009/02/bondholder-haircuts-at-citigroup-at-the-end-of-q1-the-childrens-hour-ends-in-washington/comment-page-1/#comment-145492 leftback Thu, 12 Feb 2009 17:34:19 +0000 http://www.ritholtz.com/blog/?p=18961#comment-145492 You're right Chris, we need to grow up and empower a new RTC operation. Nationalization, cramdowns and haircuts. Perp walks, FBI probes and show trials. It's gonna be a fun couple of years. Got popcorn? You’re right Chris, we need to grow up and empower a new RTC operation.

Nationalization, cramdowns and haircuts.
Perp walks, FBI probes and show trials.

It’s gonna be a fun couple of years. Got popcorn?

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