Friday, October 16, 2009

Citi and BofA

Paul Krugman is clearly confused. Regarding Citi and BofA, he writes:

Um, weren’t we being assured that recapitalization by the government — which would probably require temporary nationalization — was unnecessary, because the banks could earn their way back to adequate capital ratios? Just saying.
Um, what? Is Krugman really that unfamiliar with quarterly earnings reports? Citi's Tier 1 capital ratio is 12.7%. Citi's Tier 1 common ratio is 9.1%, up from 2.75% last quarter and 4.8% in Q3-2008. BofA's Tier 1 capital ratio is 12.46%. BofA's Tier 1 common ratio is 7.25%, up from 6.9% last quarter and 4.23% in Q3-2008. For frame of reference, JPMorgan's Tier 1 capital is 10.2%, and their Tier 1 common ratio is 8.2%. Just saying.

6 comments:

bill said...

but don't these ratios include TARP funds for BofA and Citi, as opposed to JPM's?

RCJ said...

So BofA loses $1B, and the quote is about "earning their way back to adequate capital ratios" and you think Krugman's comment is off the mark ... so how much would they have to lose for you to question their ability to earn their way back ....

Anonymous said...

It looks like BoA has been a little less aggressive in creating loan-loss provisions in the past than C or JPM.

Anonymous said...

RCJ, presumably if BofA agressively cut back loans and assets then their ratio will rise even if they make losses...

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RCJ, presumably if BofA agressively cut back loans and assets then their ratio will rise even if they make losses...

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