Thursday, 24 September 2009 20:00

As the chickens come home to roost amid those greens shoots...

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From Reuters via CNBC: Banks' Large-Loan Losses Triple: US Regulators

 U.S. regulators say that the level of losses from syndicated loans facing banks and other financial institutions tripled to $53 billion in 2009, due to poor underwriting standards and the continuing weakness in economic conditions.

According to the Shared National Credit Program (SNC) 2009 Review, an annual inter-agency report released on Thursday, credit quality deteriorated to record levels with respect to large loans and loan commitments.

 The Shared National Credit Program which was set up in 1977 to review large syndicated loans now reviews and classifies all institutional loans of at least $20 million that are shared by three or more supervised institutions.

According to the report, criticized assets rated 'special mention', 'substandard', 'doubtful' and 'loss', touched $642 billion, representing 22.3 percent of the SNC portfolio, compared with 13.4 percent a year ago.

Classified assets rated 'substandard', 'doubtful', and 'loss,' rose to $447 billion from $163 billion in 2008.

The volume of SNCs rated 'doubtful' and 'loss' in 2009 rose almost 14-fold to $110 billion, while non-accrual loans touched $172 billion, up from $22 billion in 2008. These are almost guaranteed losses, virtual holes in the balance sheet.

The report also said foreign banks held about 38 percent of the $2.9 trillion in loans, while hedge funds, pension funds, insurance companies and other entities held about 21 percent. Thus, there will be no market or buyers for these assets in the near future, save vulture funds who are looking to scalp those who already own them for profits in recovery values.

The report also said that non-banks continued to hold a "disproportionate share" of classified assets compared with their total share of the SNC portfolio.

They hold 47 percent of loans seen as 'substandard', 'doubtful' and 'loss'.

The SNC review is prepared by the Federal Reserve Board of Governors, Federal Deposit Insurance Corp (FDIC), Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).

Keep this story in mind as the professional subscribers review the portfolio performance of JP Morgan, and the mark to market gains derived from creative input manipulation. Hmmm!!!

A Must Read: An Independent Look into JP Morgan. This contains the "public preview" document (JPM Public Excerpt of Forensic Analysis SubscriptionJPM Public Excerpt of Forensic Analysis Subscription 2009-09-18 00:56:22 488.64 Kb), which is free to download.

For subscribers:

JPM Forensic Report (092209) Final- Retail JPM Forensic Report (092209) Final- Retail 2009-09-24 03:12:17 130.93 Kb

JPM Report (092209) Final - Professional JPM Report (092209) Final - Professional 2009-09-24 03:13:31 550.72 Kb


Read 3977 times Last modified on Friday, 25 September 2009 03:03
Reggie Middleton

Resident Contrarian Badass at BoomBustBlog (you can call me Editor-in-Chief)...

Disruptor-in-Chief at, where we're ushering the P2P Economy.
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