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Strategies & Market Trends : The Ego Forum -- Ignore unavailable to you. Want to Upgrade?

To: Amark$p who wrote (6973)	4/4/2010 1:04:11 AM
From: hubris33	Read Replies (1) \| Respond to of 12175

Perhaps it pays to look at the data? Like I always say - look at the data, think for yourself and draw your own conclusions... Look at the troubled asset ratio, which includes these 2 factors and others as % of bank Tier 1 capital. You want your bank to be well below the average of about 14. You really want it to be below 5, IMO. Took a look at the banks that the FDIC took over in January 2010 and note they had a range of troubled assets to capital plus reserves of 220% to 974% with a numerical average of 411%! [I left out the outlier which had a ratio of -6100%] That is a far cry from the 40% range I saw on most of the C & D rated Banks per the Street.com's ratings. So perhaps the FDIC took care of the worst Banks first and is now getting to those in the 100% or less range? So took a look at the last 10 banks the FDIC took over.... Those ratios ranged from 155% to 884% with and average of 415%. [Again left out the anomaly of 1151%] So from this chair it doesn't look like there is much difference, on "average." So it looks like the FDIC is going after Banks with VERY high ratios [i.e. >100%+] Also it doesn't look like they are running out of Banks with really terrible numbers, since the last 10 Banks seem to fall in line with those shuttered in January 2010. I'd conclude that if one's Bank has a troubled asset ratio of over 100% then they are a candidate for an FDIC take-over. Then took a look at the ratio's of the Banks that bought the last 10 Banks taken over by the FDIC. After all, the FDIC isn't going to sell assets of a failed Bank to another Bank on it's watch list, er, right? So the range of percentages of troubled assets for those Banks should be a decent indication of what the FDIC thinks is a "safe ratio." For the acquiring Banks the troubled asset ratios ranged from 0.5% to a high of 38% with and average of 21%. Shoot, one of the acquiring banks even had a spike up to 70% in the previous to last quarter, even though they are now at 34%! A quick look-see through January's buyers shows several in the 30%s as well. So it looks like my Bank with a ratio of 38% isn't the best, but it falls in the range of those the. FDIC allowed to buy failed bank assets - and thus I conclude it is less likely to be a target of a take-over by the FDIC. Further I conclude that the ratings on the Street.com are "interesting" to say the least! No need to insure against every possible risk. If the system melts down to a level where the "too big to fail" banks do indeed fail or the FDIC is unable to insure deposits, then me thinks that will be the least of the problems. Fiat money, social collapse, hyper-inflation or some such other issue is prolly gunna be of greater concern? Then again, perhaps I'm so far out to lunch that I don't even know what I don't know and need a good education to cure a terrible case of ignorance? Any help would be appreciated. H3