Even the best bank is in deep trouble

[redrumloa]

JP Morgan is considered the healthiest bank at this time, and the media made a big deal about them supposedly wanting to give back TRP money. Now, it looks like they may not be able to do that.

Is It Safe? JPMorgan Card Defaults Grow
http://www.thestreet.com/story/10488594 ... -grow.html

JPMorgan's credit card unit lost $547 million during the quarter, making it the bigger of two money-losing businesses. The company, which holds 168 million credit cards accounts, became the nation's biggest MasterCard and Visa issuer when it acquired Washington Mutual in the wake of its failure last year.

The company's net charge-off rate, the percentage of credit card accounts considered uncollectable, increased to 7.7% in the first quarter from 4.4% a year ago and 5.6% in the fourth quarter. The bank's charge-off rate has doubled in the past two years from 3.6% as of March 2007.

While total deal volume is down, the company topped investment banking league tables for equity and debt fees, according to Dealogic, a company that provides tools to banks. It's a modest strength when you consider the riskiness of the company's lending businesses.

Still, Dimon is eager to return taxpayer dollars the company received through the Troubled Asset Relief Program. Repaying the aid would allow the bank to reinstitute executives' bonuses. Banks that accepted TARP funds agreed to suspend bonuses.

If JPMorgan pays back the TARP money before the nation's economy starts to grow again, it could expose the company to unnecessary risk. Its Tier 1 capital ratio, a measure of its financial stability, would fall to 9.2% from 11% without the aid. Regulators consider a 4% ratio adequate.

Investors should avoid JPMorgan, which is rated "hold" with a grade of C. Despite a few glimmers of hope, our economy is still deteriorating and financial companies remain at risk. More than 6 million Americans are unemployed, and that number is expected to rise in the weeks ahead. Paying credit card bills will become harder for many people.

 

[FluffyMcDeath]

Goldman Sachs was able to report a profit by changing its financial calendar and this ignore December!

from the above linked blog of the earnings call...

6:50 a.m.| Where’s December?: Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can.

How did it do that? One way was to hide a lot of losses in not-so-plain sight.

Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February.

The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million.

 

[FluffyMcDeath]

Morgan Stanley also skipped December.

The results for the current quarter are compared with the results of the first quarter of the prior year, which have been recasted on a calendar basis due to a change in the Company's fiscal year end from November 30th to December 31st.

 

[redrumloa]

Morgan Stanley also skipped December.

The results for the current quarter are compared with the results of the first quarter of the prior year, which have been recasted on a calendar basis due to a change in the Company's fiscal year end from November 30th to December 31st.

I saw that, amazing. December also happens to be the month they had tons of write offs in :roll:

Then again, all the banks are cooking the books right now.