Comments on: Updated Citi Stress Maths http://www.aleablog.com/updated-citi-stress-maths/ Alea Jacta Est Mon, 12 Jul 2010 20:04:31 +0000 hourly 1 http://wordpress.org/?v=3.0 By: jck http://www.aleablog.com/updated-citi-stress-maths/#comment-3052 jck Sat, 09 May 2009 10:11:37 +0000 http://www.aleablog.com/?p=3356#comment-3052 AJ: It's modelling, so there is always going to be some scope of arguments, the good thing: it removes some uncertainty, it will force the banks to concentrate more on tier 1 common capital plu s they will want to escape the clutches of the gov. as fast as possible by borrowing without the FDIC guarantee and so on, all good. The balance sheets? Depends, the trading books have been marked down aggressively, but the banking book I am not so sure that provisions have been as aggressive (if fact I am pretty sure they haven't..). All depends on the economy, if it stabilize we are fine, if it keeps on degrading, more fireworks to come. The stress tests assumptions are definitely on the optimistic side and the banks were able to negociate the cap shortfall, so no room for errors going forward. See this: <a href="http://online.wsj.com/article/SB124182311010302297.html" rel="nofollow">Banks Won Concessions on Tests, Fed Cut Billions Off Some Initial Capital-Shortfall Estimates</a> AJ:
It’s modelling, so there is always going to be some scope of arguments, the good thing: it removes some uncertainty, it will force the banks to concentrate more on tier 1 common capital plu s they will want to escape the clutches of the gov. as fast as possible by borrowing without the FDIC guarantee and so on, all good.
The balance sheets? Depends, the trading books have been marked down aggressively, but the banking book I am not so sure that provisions have been as aggressive (if fact I am pretty sure they haven’t..). All depends on the economy, if it stabilize we are fine, if it keeps on degrading, more fireworks to come. The stress tests assumptions are definitely on the optimistic side and the banks were able to negociate the cap shortfall, so no room for errors going forward.
See this:
Banks Won Concessions on Tests, Fed Cut Billions Off Some Initial Capital-Shortfall Estimates

]]> By: AJ http://www.aleablog.com/updated-citi-stress-maths/#comment-3051 AJ Sat, 09 May 2009 03:06:54 +0000 http://www.aleablog.com/?p=3356#comment-3051 Dear JCK, Given all the esoteric math, what is your overall feeling ? a. Are the results anything to cheer about ? B. In your opinion, how bad are the bank's balancesheets ? Dear JCK,

Given all the esoteric math, what is your overall feeling ?

a. Are the results anything to cheer about ?
B. In your opinion, how bad are the bank’s balancesheets ?

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