8 Top U.S. Banks Just Acknowledged They're Insolvent

Based  upon the fair-market value of their securitized loan assets in conjunction with annual federal accounting requirements, Bloomberg's Jonathan Weil informs us this evening that eight of America's top 24 banks are insolvent in: Wells Fargo, BofA Loan Values Are a Scary Sight.

Yes, Wells Fargo, Bank of America, SunTrust, KeyCorp, Fifth Third Bancorp, Huntington Bancshares Inc., Marshall & Ilsley Corp. and Regions Financial Corp have formally acknowledged that--for all intents and purposes--they're currently insolvent.


Perhaps never before have so many banks' balance sheets been so patently full of hot air. Bank of America Corp. last week disclosed that its loans at the end of 2008 were worth $44.6 billion less than what its balance sheet said. Wells Fargo & Co. said its loans were worth $14.2 billion less than their book value. The spread at SunTrust Banks Inc. was $13.7 billion.

Keep in mind: These are the banks' own numbers. If there's any bias in them, it's bound to be on the side of optimism.

As Weil continues to explain it, if this is what the banks are now admitting,  reality's probably much worse than this. This is due to the fact that these banks are also telling us that these realities would be further "adjusted" by hoped-for, yet-to-be-determined tax writedowns, which are currently being booked as assets even though these assets are a stretch to categorize them as such. You see,  declaring future tax credits means you're saying you'll have equivalent future taxes on future profits of those amounts, too.

If eight of our top banks acknowledging insolvency is just a "recession," how many top banks acknowledging insolvency does it take to equal a depression? (Sounds like a ninth grade algebra question!)

Lovely.

Tags: bank of america, banking, banks, business accounting, business taxes, depression, Fifth Third Bancorp, Huntington Bancshares Inc., KeyCorp, Marshall & Ilsley Corp., Recession, Regions Financial Corp, SunTrust, U.S. banks, Wells Fargo (all tags)

Comments

6 Comments

Tips: Aesop's Accounting Fables n/t

by bobswern 2009-03-04 11:30PM | 0 recs
Bank of America?

Oh, come on Bob, you have to be wrong.

Why, scant months ago, I saw that segment on 60 minutes about BOA, and how those Southern Gentelman bamboozled Wallstreet et all and were THE TRUE Big Swinging Dicks, the best of the best, not too big to fail..

TOO SMART TO FAIL ....

TheY're not all wall-street-ny-liberal-elite-investment- i-fied, they are the real deal, I true Amurikan success story.....

That's why they're down south, so they are not contaminated by those big northest city thinkuns...

Now, you're telling me that was all BS?

Gees...I'm gonna have to call Andy Rooney and complain!

by WashStateBlue 2009-03-05 03:58AM | 0 recs
Re: Bank of America?

Thanks for the morning laugh.

The CEO's of these banks were hired as entreprenuers to expand corporation income. So what do expect from them? They don't work for nothing. And there's always another corporation waiting out there if you don't pay up.

The only resort then for the government is to curtail CEO rewards. Has this happened yet?

Now you can laugh too.

by MainStreet 2009-03-05 07:06AM | 0 recs
Re: Bank of America?

I think Obama's budget actually takes a decent step toward greater pay equality by raising taxes on income and, especially, capital gains for the wealthiest Americans.  Make corporate boards decide whether they should fork over money to Uncle Sam just to stroke the ego of their CEO wunderkind.  Because everyone is presumably playing by the same rules, this would descend on all companies equally.

It needs to be much more dramatic and I'd be happier if a few more tax categories were introduced to really target the highest-paid folks.  But it's a step in the right direction.

by the mollusk 2009-03-05 07:16AM | 0 recs
Good the stress tests are working..we are finally

getting to know the reality.

by louisprandtl 2009-03-05 02:15PM | 0 recs
ugh

I've taken a break from writing and reading on the economy. I was getting too depressed. Instead I've turned my attention to Afghanistan & Pakistan. Sooo much more uplifting.

I honestly want to crawl in a hole. Here a mess, there a mess, everywhere a mess.

by Charles Lemos 2009-03-05 09:18PM | 0 recs

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