As anticipated in the latest forensic analysis, JPMorgan Chase & Co., the biggest credit-card lender, said defaults climbed to a 2009 high of 8.81 percent from 8.02 percent in October. Delinquencies for the New York-based bank fell to 4.9 percent from 4.95 percent.
Defaults at Bank of America Corp., the No. 2 card lender, fell to 13 percent from 13.22 percent, while late payments increased to 7.69 percent from 7.59 percent, the Charlotte, North Carolina-based bank said in a federal filing.
pdf BAC Swap exposure_011009 - Is BAC the next AIG?
Capital One Financial Corp., the third-biggest issuer of Visa Inc. credit cards, posted increases in defaults and delinquencies. Write-offs climbed to 9.6 percent from 9.04 percent, and payments at least 30 days overdue rose to 5.87 percent from 5.72 percent, McLean, Virginia-based Capital One said.
I was reading a post by George Washington over at ZeroHedge that actually spurred the following rant. An excerpt reads:
The Telegraph notes:
The former US Federal Reserve chairman told an audience that included some of the world's most senior financiers that their industry's "single most important" contribution in the last 25 years has been automatic telling machines, which he said had at least proved "useful".
Echoing FSA chairman Lord Turner's comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.
When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."
He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and "proprietary trading should be pushed out of investment banks and to hedge funds where they belong".
It is not just George Soros.
From the WSJ:
Credit-Rating Firms Show Independence
Are the mice finally roaring? The credit crunch showed that ratings firms missed huge swaths of risk embedded in the economy and markets. [Risks that many independent sources such as BoomBustBlog have routinely and regularly pointed out] But, recently, Standard & Poor's, Moody's Investors Service and Fitch Ratings have produced research or made decisions that exhibit an encouraging level of independence.
I have finally updated my Alt-A and Subprime delinquency, charge-off and loss data using FDIC, NY Fed, Corelogic, First American, and Bloomberg (among others) as sources. If you thought things looked bad last year or this spring, they are getting worse - with no reprieve for the 3rd quarter despite the extreme amounts of liquidity and capital thrown at the situation by central bankers and the US government. As soon as I started writing this piece, CNBC comes out with "US to Push Mortgage Lenders To Modify More Home Loans: The
US Treasury announced plans to push lenders to modify more loans after
the administration's $75 billion housing rescue plan, called Making
Home Affordable, fell short and foreclosures continued rising."
Hmmm... $75 billion is a lot of money. Mayhap the problem is that the banks know how useless pushing on a string is, or mayhap $75 billion is not enough to stem $304 billion (and counting) in Alt A and subprime losses that are still in the pipeline (see graphic below).
It gets worse though. Let's glance at the non-conforming loan losses that have already occurred in comparison to the SCAP projections that justified the return of TARP in many cases. Recovery rates had the illusion of increasing ever so slightly due to an increase in prices as illustrated by the Case Shiller index. I have expressed my doubts about this housing price recovery for several reasons, the least of which is the construction flaws in the index itself which fail to capture the nature of the transient price increases, namely the activity of short term investors and flippers (see On the Latest Housing Numbers). There are some areas that have witnessed some firming of pricing though, but that firmness is the result of the Fed and Treasury trying to blow another bubble within a bursting bubble and is more than outdone by the rampant deterioration in credit quality of loans that result in the dumping of foreclosures -> REOs -> short turnaround sales/flips (via investors, which are not captured by Case Shiller, hence the illusion of a firming market in the lower end of housing prices) all over the place.
Subprime delinquency, charge-off and foreclosure rates are still flying through the roof - with many other categories rushing to keep up. This is as I described from the beginning (2007) through the Asset Securitization Crisis series - there was an underwriting induced crisis and never a true "subprime crisis". As such, there is a very strong chance that many other loan categories may outstrip subprime loans in terms of aggregate losses. It hasn't happened yet, but the Alt-A category is hot on subprime's heels (see below). Construction and CRE will follow up the rear with unsecured consumer (ex. credit cards) and commercial loans fighting to get into the race.
Below, you see the loss trend as of October 2009. These are losses that have most likely NOT been claimed by the banks, and they are significant. In addition, the credit deterioration trend is climbing, not falling. If I am correct in my assumption on the validity of the Case Shiller index in capturing true inventory price depreciation across investor related sales and bank "hold outs", then prices will soon start dropping again, killing recovery rates and causing losses to spike even further.
First, a quick news scan:
- Dubai Debt Delays Revive Fear of Financial Crisis
- US Markets Bracing for Selloff on Dubai Debt Worries
- Stocks Fall as Treasuries, Yen, Swaps Rise on Dubai Attempt to Delay Debt
- Yen Strengthens to 14-Year High, Prompting Speculation Japan to Intervene
- Fujii Says Japan May Contact U.S., Europe After Yen's Jump to 14-Year High
- Abu Dhabi Commercial Bank Is Said to Be Owed $1.9 Billion by Dubai World
- Treasuries Jump on Demand for Safer Assets After Dubai Asks to Delay Debt
- Sony, Toyota, Japanese Exporters Brace for `Breaking Point' as Yen Surges
- Japan's Hirano Says Rapid Currency Moves Are `Undesirable' as Yen Rallies (you betcha, reference the JPM links which highlight interest rate and currency exposure for JPM below)
My regular readers should remember my warnings on the currency trade risks (Japan's Hirano can testify), and interest rate derivative concentrations (let's see what happens to the counterparty daisy chain if Dubai defaults): "The Next Step in the Bank Implosion Cycle???". As excerpted:
Even more alarming is some of the largest banks in the world, and some of the most respected (and disrespected) banks are heavily leveraged into this trade one way or the other. The alleged swap hedges that these guys allegedly have will be put to the test, and put to the test relatively soon. As I have alleged in previous posts (As the markets climb on top of one big, incestuous pool of concentrated risk... ), you cannot truly hedge multi-billion risks in a closed circle of only 4 counterparties, all of whom are in the same businesses taking the same risks.
Click to expand!
Yesterday, I commented on Goldman's CMBS offering through the government's leverage program known as TALF. I was very nice and diplomatic, yet despite such I still received what I would consider, inappropriate feedback. Okay, let's take the politically correct gloves off - they never fit me anyway. This deal probably flew because Goldman Sachs underwrote it. Goldman thrives off of brand name value primarily, other than that nothing really sets them apart. Contrary to mainstream media inspired belief, they are not better than everybody else at everything. I posit, they are probably not better at anybody else at anything other than marketing and lobbying which allows them the perception of being better than everybody else and the protection from the government to get away with things other banks can't (or are afraid to try). I want to delve further into that CMBS deal I outlined yesterday (so be sure to read through this, particularly if you're with an insurance company), but before I do let me try to dispel the Goldman myth once and for all...
Goldman is a bank, just like everybody else. They hire the same people who went to the same schools, taught by the same teachers to use the same models to do the same things as the other big banks. When Goldman hires a banker with experience, where do you think they hire them from? When Goldman loses a banker, where do you think they lose them to?
Think about it:
- Financial shares slumped, their stock fell - just like everybody else.
- The market turned on big broker/dealers, they had to run for government protection - just like everybody else.
- The market recovered, their shares recovered - just like everybody else.
- Goldman pays the vast majority of its net revenue out as compensation, not dividends! I haven't checked, but I would wager that they probably paid more than their outstanding market cap as bonuses since going public. What does this mean? It means that you are much better off working at Goldman than you are as a client or as a shareholder. Keep that in mind as we review the CMBS offering from an anecdotal perspective later on in this post.
Their stock is fraught with risk that the sell side never bothers to analyze, which is why they are considered superstars when they have good quarters. Adjust for risk, and Goldman actually underperforms - see "Who is the Newest Riskiest Bank on the Street?" where I break it down in detail, showing Goldman as the leader in leverage, cost of capital and VaR as compared to the decrease in Risk Adjusted Return. I addressed similar points in the previous year in Goldman Sachs Snapshot: Risk vs. Reward vs. Reputations on the Street.
Goldman Sachs Equity Guidance Would Have Made You a Fortune on Lehman!
I have outran their equity analysts and asset management arm on practically every stock I covered and I have a skeleton staff. Now, to be honest, I am devoid of the massive conflicts of interests that run through that company, but that is the point! To this day, we still have institutions that buy financial widgets because Goldman told them to, regardless of the fitness or viability of said widget.
For those with short term, or worse yet, media induced brand name fever, let's rehash "Is Lehman really a lemming in disguise?" (Thursday, 21 February 2008) and Is this the Breaking of the Bear?. Then peruse Lehman rumors may be more founded than some may have us believe Tuesday, 01 April 2008 (be sure to read through the comments, its like deja vu, all over again!), Lehman stock, rumors and anti-rumors that support the rumors Friday, 28 March 2008 and Funny CLO business at Lehman Friday, 04 April 2008
The esteemed Goldman Sachs did not agree with my thesis on Lehman. Reference the following graph, and click it if you need to enlarge. Notice the tone, and ultimately the outright indication of a fall in the posts from February through April 2008, and cross reference with the rather rosy and optimistic guidance from the esteemed Goldman (Sachs) boys during the same time period, then... Oh yeah, Lehman filed for bankruptcy!!!
Does anybody think that Lehman was a "one off" occurrence? Well download Blog vs. Broker Analysis - supplementary material and you will be able to track the performance of all of the big banks and broker recommendations for the year 2008 for the companies that I covered on my blog. I can save you the time it takes to read it and just tell you that it ain't all its cracked up to be. Again, I inquire as to why these companies' clients do not wise up?
Now, back to that CMBS Offering
Pray tell, educate me as to where Goldman's clients actually think they get all of their money from? Let's take that latest CMBS offering that they hawked Monday. In Reggie Middleton Personally Contragulates Goldman, but Questions How Much More Can Be Pulled Off, I blogged about the 4% (unlevered yield) Goldman was able to get for their underwriting clients (Developers Diversified Realty, a REIT that came up in another blog post of interest - "Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!"). This was actually a big win for DDR for they got access to 4% money at a time when commercial real estate is in the crapper. It was also a big win for Goldman, for they moved a big CRE/CMBS deal through a government leverage plan when such deals really haven't moved much. Was it a good deal for the institutions that Goldman peddled the securities to, though? Yet, I query further, who does Goldman really work for? To whom do they have a fiduciary duty? Is that duty to their bankers, traders, and analysts to get the biggest fees, commissions, and spreads possible? Quite possibly, since they are on track to announce record bonuses. I don't see clients putting out press releases touting record returns from dealing with Goldman! Is that duty to the share holder? Well, it doesn't look like it from a risk adjusted return perspective (see "Who is the Newest Riskiest Bank on the Street?"). Is that duty to DDR to get them the lowest rate possible? Quite possibly, for 4% is pretty damn good, and they lowered the rate due to being oversubscribed (high demand). But wait a minute, If their fiduciary duty is to DDR (or themselves), then they can't have a fiduciary duty to the insurance companies and asset managers who they are pitching these CMBS to, can they? Buyers should want a higher yield to compensate for the risk, no? The Wall Street Journal reported that this was a low risk deal. Really!!!??? Let's look deeper into that assertion from an anecdotal perspective, shall we?
In the WSJ.com article, it was stated the collateral (the mall properties) was conservative because they were occupied by discount chains where shoppers flock during hard times. Then they go on to contradict themselves by saying that occupancy is in a material downtrend:
The deal reflects the high bar the Fed has set for loans eligible for TALF financing. The 28 shopping centers in 19 states securing the bonds have stable cash flow because they often are occupied by discount retailers that tend to attract business even in a recession. For instance, one of the properties is Hamilton Marketplace, near Princeton, N.J., a 957,000-square-foot property whose tenants include Wal-Mart Stores, Lowe's, BJ's Wholesale Club and supermarket ShopRite. According to Fitch Ratings, the property has maintained an average occupancy of 96.7% since 2006 and is 95.1% occupied.
Isn't 95.1% about 151 basis points less than 96.7%? Will this downtrend continue? Will it intensify? Do you see commercial real estate getting better in the next 5 years or worse? If you wanted buyers to perceive safety, you would quote an UPTREND in occupancy, would you not?
"It's a great execution for the borrower," says Scott Simon, managing director and head of mortgage- and asset-backed securities portfolio manager at Pimco, a leading bond house. "If other real-estate investors can borrow money at that rate, it would be a real game changer for the commercial real-estate market that has been so devoid of financing."
Mr. Simon declined to comment on whether Pimco would buy any of the Diversified Realty bonds. Bids for the securities are expected to come from many mutual funds, insurance companies and other institutional investors. Firms that are considering the deal include Babson Capital Management, the investment-management unit of Massachusetts Mutual Life Insurance Co. and Principal Financial Group, according to people familiar with the matter. Babson Capital declined to comment. A representative at Principal Financial didn't respond to requests for comment.
Institutional investors are attracted to the deal because it is viewed as a low-risk investment with relatively healthy returns when compared with five-year Treasurys, which are yielding about 2%.
Well, Treasurys don't have rollover issues (at least not yet), and CMBS do. There is usually a reason for higher yield, and that is often higher risk, actual and/or perceived. I will walk through why these CMBS buyers are getting twice the yield of treasuries in a moment, as well as explaining how they are so woefully under-compensated as to be tantamount to a crime (or is it a break in fiduciary duty?)
Investors buying the triple-A slice of the deal, totaling $323.5 million, can get an unleveraged return of about 4%, according to price information distributed to possible investors by Goldman late Friday and reviewed by The Wall Street Journal. If they finance their purchases with TALF funding, their returns can rise to about 6%.
I went into Fitch and its AAA ratings in "Reggie Middleton Personally Contragulates Goldman, but Questions How Much More Can Be Pulled Off". Anyone who believes Fitch's ratings actually mean anything should click that link scroll down to around the middle, then read tightly from a secure device. If you are carrying a pda, iphone, or notebook you may drop it from uncontrollable laughter!
The $400 million loan represents about half of the value of the underlying properties. By comparison, in the years before the financial crisis erupted in 2007, banks were willing to lend more than 70% of a property's value because the debt could be easily sold as CMBS. Even under a "stress" scenario, according to Fitch, the Developers Diversified properties would produce a cash flow of about 1.44 times what is required to service the debt. Back when credit was easy, the ratio for stress scenarios would even fall below one for many CMBS offerings.
This is the kicker, here. Loans can't get rolled over at 70%, 65% or even 60% LTV these days, and things are getting worse, not better. See Fitch's warning (that's right, the same guys that gave those very same tranches above AAA ratings) warning that Insurers Face $23 Billion Loss on Commercial Property.
The credit crisis has driven $138 billion worth of U.S. commercial properties into default, foreclosure or debt restructuring, according to New York-based Real Capital Analytics Inc. Commercial real estate prices have plunged almost 41 percent since October 2007, the Moody’s/REAL Commercial Property Price Indices show.
So, let's do a little simple math here. Goldman's salesman talks a good game (as the pimp) to the sweet little investor looking for yield (as the little girl just getting off the bus from a small town in the midwest looking for fame and stardom in the big city). They say, hey, I'll write these CMBS for this conservative CRE portfolio at only 50LTV. What could go wrong? This happens in October of 2007. In November of 2009, you find that your collateral is now around 89LTV (due to the 41 percent drop up to October in a rapidly decreasing asset value environment) and still dropping fast, with the LTV rapidly approaching 100, wherein you start taking guaranteed haircuts on your Fitch AAA rated (you can just imagine me cracking up in the background) tranched CMBS. Boy, those 400 measly basis points don't look like much compensation now, does it? You also see why Treasuries are yielding 2%, don't you? You are at risk of losing significant principal, for according to the WSJ article, the only deals getting done are at 50 LTV. Who the hell is going to cover that 390 point spread? You call your Goldman rep for help, but you can't reach him because he is in the Mediterranean with those TWO (that's right, not one but two) bad ass Italian chicks testing out his new Azimut 86S he just bought in a recession with YOUR commission dollars and the vig (oops, I mean spread) from your deal which is currently underwater!
If this deal would have went down this time, next year would GS have been in breach of their fiduciary duties: Dodd bill would make reps fiduciaries
A better question I know all of you are pondering, will this actually happen to the DDR deal? Well, let's bring back the chart of the week for the Japanese perspective from the "Bad CRE, Rotten Home Loans, and the End of US Banking Prominence?" post.
You tell me if these CMBS aren't worth more than 4 points?
Now, don't get me wrong. I have nothing against Goldman Sachs. It does rather irk me when everybody, and I mean everybody truly believes that their sh1t doesn't stink, though. I actually have to bring my kids to school, so I will finish this post up with what it means to insurance companies who buy things such as this DDR CMBS deal from Goldman later on today or tomorrow. I'll include tidbits of what my subscribers know about the insurance industry, and I will also release some sneak peaks of the upcoming REIT research to subscribers as well.
It's bound to happen if regulators don't stop playing hide the sausage and don't start forcing banks to take their medicine. First, a quick recap of the nonsense currently taking place. This post is designed to convince banks that they are considerably better off taking their medicine now than going on with the government endorsed plan of pretending your not sick and risking major surgery, plus chemo and radiation just a year or two later. My next post will be a selection of REITs that didn't make my shortlist, followed by a new REIT report for subscribers that will explicitly show property values of each and every property in said REITs portfolio (and potentially the lender or CMBS/mortgagee pool collateralized by said properties - that's right, someone may be called out).
After dealing with European banks during my work with GGP, I have come to the conclusion that most regional, community and even global banks have no where near the capacity and/or expertise to properly evaluate and value the projects/assets that they have invested in. Well, if that is the case, this is your chance to rectify that problem - on the cheap, at least on a relative basis. So if you are in an appropriate position in your bank, fund or lender - read this evidence that supports the proactive behavior of snatching the big crumbs off the table before there is a mad dash for the micro-specs of bread that may or may not be left if one were to wait it out while playing "hide the sausage games". I'll give you the tools to make a convincing argument, trust me. Here is the broader macro argument for lenders pulling bad debt from under the REIT and CRE industry, thus supporting a bearish thesis for said players.
First: A picture is worth a thousand words...
Instance asset gains and market value stemming from just a small tweak of truth. Financial stocks fly, moving farther and farther from their fundamental values.
Second: We have the obvious manipulation that is occurring in the REIT space (see Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!). Zerohedge speculates "Is Goldman Preparing To Upgrade The REIT Sector?"
Third: We have government complicity in the purposeful opacity of the values of the mortgage assets (see the FDIC "Prudent Commercial Real Estate Loan Workouts" guidance issued Oct 30th, as reported by the WSJ: Banks Hasten to Adopt New Loan Rules and the new FDIC guidance that states performing loans "made to creditworthy borrowers" will not require write downs "solely because the value of the underlying collateral declined").
Fouth: We have a false sense of security that nearly everybody believes should make us insecure, yet somehow we have those long in the markets feelng warm and fuzzy. See You've Been Bamboozled, Hoodwinked and Lied To! Here's the Proof. What Are You Going to Do About It?.
Now, for those of you who believe that the government's "pretend and extend" policy has any chance in hell of working, or better yet, that we are not following in the footsteps of Japan, let's take a pictorial trip through recent history. There are nearly no Japanese banks in the top 20 bank category on global basis by 2003 - NONE (save potentially Nomura, which arguably survived in name, alone). As you can see, they literally dominated 90% of the space in 1990!
Click to enlarge...
Source: Cap Gemini Banking M&A
I want the banks that read my upcoming real estate analysis to take heed to history. It truly does tend to repeat itself. If you are an officer in a bank with CRE exposure, reach out to me from your work email and I will supply you with an abbreviated copy of one of the recent reports, gratis. This should whet your appetite to subscribe for more.
Well, are we following the Japanese "Lost Path". Notwithstanding the damning evidence of hide the truth and hide amongst lies linked to above, ponder the following rather dated, but still quite poignant data...
Thus, the first of the two reports for subscribers will probably be pushed off until next week. We had a problem sourcing market rents for some of the properties in the REIT's portfolios and I prefer to use actual numbers in lieu of assumptions so it took a little longer to populate the models as well.
I will discuss the rejects from the short list today, though. One aspect of crystallizing the thesis is dealing with the obvious manipulation that is occurring in the REIT space (see Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!) as well as government complicity in the purposeful opacity of the values of the mortgage assets (see the FDIC "Prudent Commercial Real Estate Loan Workouts" guidance issued Oct 30th, as reported by the WSJ: Banks Hasten to Adopt New Loan Rules and the new FDIC guidance that states performing loans "made to creditworthy borrowers" will not require write downs "solely because the value of the underlying collateral declined").
Yes, you've been bamboozled! Hoodwinked! You're being taken for suckers that not only can't count, but whose memories have been washed away by threats of swine flu and reality TV shows. Do not fret, though. What I have is PROOF of the great Banking Bamboozle, for all to see. Now, armed with this proof, all I need for you is to go out and do something about it. Don't sit there staring at your screen, thinking "damn, he's got a point". Send a copy of this proof along with your comments to all of your elected officials, congressspersons, senators, bankers, insurers, business partners and the media outlet of your choice. The other alternative is... Maybe the powers that be have a point and threats of swine flu combined with the latest episode of survivor and flowery proclamations of "green shoots" amid 10.2% unemployment is all it takes to pull the wool over your eyes. We shall see, shall we??? This is a fact and figures packed blog post, complete with a plethora of downloadable models and references. Please do take the time to read through it before you return to your daily dose of government recommended "American Idol"... Yes, my goal is to piss you off! To goad you into action! To elicit a response.... and it gets worse as you read on.
I have compartmentalized this rather lengthy, yet interesting (to the right people) diatribe into major segments. Feel free to skip ahead or pick and choose the ones which most interest you - or if you have been freshly unplugged from the Matrix, I suggest you sit back with a good glass of wine and read through this entire missive:
- Social mobility: The reason why the big banks are being protected at all costs and on the breaking backs of the unemployed taxpayer
- The truth behind the Stress Tests and Unemployment
- The truth behind credit loss assumptions: Where the hell did the stress test numbers come from?
- The Grand Finale: So, what banks are in trouble and how much trouble are they in? A very granular and unprecedented look at the weaknesses of some of the anointed 19 that you cannot get from anywhere else!
You may have seen bits and pieces of stress test analysis in other blogs and news sites, but I doubt if you have seen all pieces of the pie stitched together, as below. You see, many complain about Goldman Sach's $40 billion of bonuses during a time of near depression, but as all who bother to even consider have probably summarized - this government is ran by, and ran for, the capitalist class. If you even have to ask a question after this statement, you can be rest assured you are not part of that class that the government truly serves. In preparation for the social mobility thesis behind the protection of the banks below, you should download this handy-dandy model that shows you (in full detail) where YOU stand in the grand scheme of socio-economic stratification, or to put it more simply, how much the powers that be believe CNBC can effect your behavior (quick registration is required, you may choose the free option to subscribe) - Socio-economic stratification model. For many, going through this model is the equivalent of choosing between the blue and red pill in the Matrix, literally risking an unjacking from the network of make believe.
For those who feel you must get offended when social class is discussed, I strongly suggest you stop here and watch Cramer scream BUY! BUY! BUY! or otherwise get a solid dose of MSM, mind numbing programming. For the rest of you who choose to continue reading, you have just chosen the Blue Pill - prepare to be unplugged from the Matrix!
I received this message the other day through the messaging system in my site:
"I read your article from early Sept about the next four banks likely to fail. I writing to let you know we filed our thrid quarter call report but more importantly, we are filing our earnings release today, It should be out there within the hour. I know your article was based on call report data and you can't base your analysis on other factors that you don't have, but I think the title of your article was a stetch and way too provacative. It probably helps sell your services but is a great diservice to those struggling daily to clean up the mess. I hope after your read the new informtion you'll write an article closer to reality and retract anything you may have said that isn't likely. Thanks,
Very Interested Party, United Security Banchares "UBFO""
I removed his identity since he contacted me privately and didn't expressly communicate he wanted his opinion published. He is far from a disinterested party though, and is referring to an article that I wrote on the Doo Doo banks in September, "More Doo Doo Banks Available to the Public". For those of you who do not know, I used this term to coin the list of banks that I predicted may hit the fan in the spring of 2008 - "see 32 banks in deep doo-doo". If one peruses the list of the Who's Who in Doo Doo, one can see that it appears that I had a valid point as many of those banks collapsed or had to be rescued. In re-reading the article, I don't think the title of the article was a stretch at all, nor too provocative, considering the path of previous banks with similar metrics have taken. In addition, I never said these banks were likely to fail. They are in trouble, though. I understand his point, but I do not agree with it. I am sure if he viewed this from outside the bank as compared to inside, he would consider his bank's numbers to be precarious as well.