For the first 9 months of 2008, USB had operating cash flow of $3.9B and dividends paid of $2.2B. They have $7B in cash and cash equivalents versus a grand total of $3B in sub-prime mortgage loans. This bank is in good shape. If anyone has real financial concerns about USB to point out other than personal bad experiences with USB service or whatever, I'd like to hear about them. But the concerns need to be based on real data, not quotes from short sellers.
What about the net 56B in debt?
Thats 20 years to pay back assuming you put every red cent of "net income" towards debt relief.
That kind of leverage isn't just financially precarious, its pure insanity.
Most banks are leveraged quite a bit anyway, because of fractional reserve banking they get to lend out 9x their deposits by law (nice scam, eh?), but 20x? Ridiculousness!
Heres some real data, what about the net 56B in debt? Take all the net income for the last 12 months, and apply 100% of that amount to debt service? Do you now realize the bank would take almost 20 years just to pay off their debts?
Why would anyone buy a company that has leveraged itself 20:1 and the assets they claim they have are all tanking themselves because the housing market is looking to shave another 20% of value, and the receivables (the loans) are all imperiled because unemployment is going to double (maybe even triple) in the next 12 months. Even if it doesn't officially triple, if the governments answer to massive private sector failures and layoffs is to hire those people into low wage government sinecure jobs (spreading asphalts, picking up trash, removing graffiti, "public service") ,that actually represents a massive decline in employment because there is no productivity associated with picking up trash and cleaning sidewalks , it adds no value to any investment, and on top of that, the wages are 1/3 what these laid off people had been making.
America is fast becoming a do nothing nation, and most jobs the government creates will be little more than busywork. Think about what this means to any creditor...they are screwed. They are never going to get a dime back from a guy who gets laid off from a good job in a corporation and his next job is working for OBama's chain gang pushing a broom next to I-95 and making $12 an hour. Forgettaboutit!
Bullshit. Who needs a bank? If you dont have any investments to manage why in the hell do you need a bank to add cost to keeping your money? You realize the average interest rate on a checking account is about 1%? Savings about 1.5%?
Why even bother? Like picking up pennies on the train tracks and wasting your energy.
When most Americans who work have nothing left after paying bills a bank is not only frivolous but an actual drag on their finances, because they will raped by high "fees" for keeping an account open, as it is the only way a bank will be able to earn any money. They won't have enough deposits to lend out a significant amount of money, and even if they could lend it out, it would all be at risk since there will be no creditworthy customers left who have the ability to repay. Anyone who has the ability to repay a debt won't need the usual banking products (personal lines of credit, auto loans, home loans, etc).