Personally, I'm happier when my options are limited. I like knowing that I can't afford to move and I can't afford to quit my job and I can't afford to think about the boundless possibilities that the universe has to offer, I can only afford to clean my own stupid house and eat leftovers and lose weight so the shitty clothes I already have don't look even worse on me than they would otherwise. Under the duress of an economic meltdown, I have to learn to bake bread and grow tomatoes and hit up my friends for hand-me-downs for my kids.
NatCity has $54b of residential mortgages on its balance sheet and only took $38m in losses last year, with a $800m addition to the loss provision.
$17.5b of those loans are HELOCs, $6b is subprime, and $3b is underwater construction perm financing.
This management team bought back stock last year, raised the dividend, then cut the dividend after the jumbo market seized. Wells, Fifth Third, Key, Bank of Nova Scotia, and several private equity firms have had a sniff of the books. It is unclear to me whether they walked or put in a lowball bid that the board of directors passed on.
The dividend is usually declared 3-4 weeks in advance of payment, but no announcement has been made for the April payout, which would have been made on April 22nd. At some point the writedowns have to occur. I am sure the regulators are pressing for a sale since writedowns will put the bank well below capital requirements. But every day the bidders delay, the lower the price will be as writedowns await.
This bank has $100b plus in deposits, this is no small news.
I wonder if National City will be a test case of the 'too big to fail' argument. I would think, from a 'pour encourager les autres' perspective, the demise of a major regional might be useful. I have no idea what National City's profile in the capital markets is, but it might be a good candidate for an, er, exemplary fate.
and clyde, I'd hate to get on your bad side. You have a nice way of marshalling ugly facts.
Thanks for the compliment, linear algebra. I chalk up the NatCity episode to the "all offense, no defense" syndrome, which will claim many more banks. I believe these lapses in credit discipline get punished in normal credit cycles, but the Fed has not allowed a normal credit cycle in so long that the new generation of managers never had watch their risk.
Another thing to chew on. This might be the biggest Fed receivership in U.S. history if the board does not accept an offer, any offer. Derivative counterparty issues are not very pronounced in this case, so you are right, if the feds don't close this one down then the other regionals will be propped up and allowed to operate well under their required capital levels.
The name is from the Fifth National Bank merging with the Third National Bank. In the merge Fifth Third was chosen over Third Fifth cause the former sounds classier I guess.
Fifth third is apparently still solid because they were too slow and plodding to get their subprime operation working before last August. They did manage to get into "hot-growth" markets like southern Florida but not enough to ruin the balance sheet.
Fifth 3rd was one of the banks that focused on the Great Chicago Branch Buildout of '04-'07, so it's not surprising they didn't manage to get a subprime lending operation up and running.
In many neighborhoods, you can't walk 2 blocks without passing 5 bank branches. It's worse than Starbucks. It got so bad that the city changed the building codes to try to combat it.
A few nations participated, but it was mostly large regionals with little prior exposure in Chicago.
Personally, I HATE National City Bank. While I was a poor student, their bank was the only one the un-vehicled like me could reach. $6/mo they charged back in the day (mid 1990s) for a plain checking account. I hope senior management gets cleaned out.
First comment is OT? Oh, well.
There's a funny article in Salon called "How I Learned to Stop Worrying and Love The Recession" -
Salon.com Life | How I learned to stop worrying and love the recession
Sample:
Personally, I'm happier when my options are limited. I like knowing that I can't afford to move and I can't afford to quit my job and I can't afford to think about the boundless possibilities that the universe has to offer, I can only afford to clean my own stupid house and eat leftovers and lose weight so the shitty clothes I already have don't look even worse on me than they would otherwise. Under the duress of an economic meltdown, I have to learn to bake bread and grow tomatoes and hit up my friends for hand-me-downs for my kids.
primero?
Bank of Nova Scotia is kicking the tires. NCC has lost around 75% of its market cap....
"... a transaction that will ``enable senior management to keep their jobs...."
That's the most important consideration, right?
NatCity has $54b of residential mortgages on its balance sheet and only took $38m in losses last year, with a $800m addition to the loss provision.
$17.5b of those loans are HELOCs, $6b is subprime, and $3b is underwater construction perm financing.
This management team bought back stock last year, raised the dividend, then cut the dividend after the jumbo market seized. Wells, Fifth Third, Key, Bank of Nova Scotia, and several private equity firms have had a sniff of the books. It is unclear to me whether they walked or put in a lowball bid that the board of directors passed on.
The dividend is usually declared 3-4 weeks in advance of payment, but no announcement has been made for the April payout, which would have been made on April 22nd. At some point the writedowns have to occur. I am sure the regulators are pressing for a sale since writedowns will put the bank well below capital requirements. But every day the bidders delay, the lower the price will be as writedowns await.
This bank has $100b plus in deposits, this is no small news.
I wonder if National City will be a test case of the 'too big to fail' argument. I would think, from a 'pour encourager les autres' perspective, the demise of a major regional might be useful. I have no idea what National City's profile in the capital markets is, but it might be a good candidate for an, er, exemplary fate.
and clyde, I'd hate to get on your bad side. You have a nice way of marshalling ugly facts.
Thanks for the compliment, linear algebra. I chalk up the NatCity episode to the "all offense, no defense" syndrome, which will claim many more banks. I believe these lapses in credit discipline get punished in normal credit cycles, but the Fed has not allowed a normal credit cycle in so long that the new generation of managers never had watch their risk.
Another thing to chew on. This might be the biggest Fed receivership in U.S. history if the board does not accept an offer, any offer. Derivative counterparty issues are not very pronounced in this case, so you are right, if the feds don't close this one down then the other regionals will be propped up and allowed to operate well under their required capital levels.
should be "never had to watch their risk".
If all the National City Branches vanished overnight that would certainly help the remaining Ohio banking industry.
There are more branches (and golf courses) per capita then many other states.
Terry writes:
"... a transaction that will ``enable senior management to keep their jobs...."
That's the most important consideration, right?
Terry | 04.19.08 - 5:21 pm | #
I'd say Terry has all makings of becoming a VERY successful corporate consultant.
You should look into that, Terry.
What sort of a name is "Fifth Third" anyway?
I prefer the third fifth, myself.
I think the bank was originally at the corner of 5th st and 3rd ave in Cinci.
Good one, wally. Maybe you can finish this one:
A baby seal walks into a bar.
The bartender sez.."what'll ya have?"
" Carlomagno writes:
What sort of a name is "Fifth Third" anyway?
Carlomagno | 04.19.08 - 6:37 pm | # "
Sort of like "Five of Nine" I do believe they are part of the Borg collective.
No big deal, but this seems more like a CR item than a Tanta item.
I've had a small checking account with National City for a long time. No complaints, but in my town they seem to be shedding branches.
...."anything but a Canadian Club!"
The name is from the Fifth National Bank merging with the Third National Bank. In the merge Fifth Third was chosen over Third Fifth cause the former sounds classier I guess.
The name is from the Fifth National Bank merging with the Third National Bank.
What happened to the Fourth? Left to wither on the vine?
Hmmm maybe I should hold off on their 5% 4 year cd then.
Terry: It's certainly a business rationale I haven't heard that often before.
Shnapster: The "club" part was immediately apparent to me, but I'm not that versed in cocktail names.
Fifth third is apparently still solid because they were too slow and plodding to get their subprime operation working before last August. They did manage to get into "hot-growth" markets like southern Florida but not enough to ruin the balance sheet.
Survival of the most incompetent I guess.
Fifth 3rd was one of the banks that focused on the Great Chicago Branch Buildout of '04-'07, so it's not surprising they didn't manage to get a subprime lending operation up and running.
In many neighborhoods, you can't walk 2 blocks without passing 5 bank branches. It's worse than Starbucks. It got so bad that the city changed the building codes to try to combat it.
A few nations participated, but it was mostly large regionals with little prior exposure in Chicago.
Personally, I HATE National City Bank. While I was a poor student, their bank was the only one the un-vehicled like me could reach. $6/mo they charged back in the day (mid 1990s) for a plain checking account. I hope senior management gets cleaned out.
Knowing full well the party has left days ago, I think that baby seal would be well advised not to order a shot of anything.