There isn't a major bank in the US that isn't trying to hide the fact that the market value of their assets is less than their liabilities.
Book value is an imaginary number that is important only to accountants and the IRS.
That said, many banks (particularly smaller mortgage banks deemed expendable by the Fed), will fail.
The question for LEH, C, BAC, JPM, WFC, etc., is will the banking system survive? If it does, then BAC, JPM and WFC will likely survive, and anyone owning their stocks (when foreclosures begin to decline substantially in 2011 or so) will prosper.
Citibank, IMO, is at greater risk, and the ability of similar financial institutions to raise money, and the ability of Citibank to raise money, will be a significant factor in its survival.
In other words, Citibank has a significant conflict of interest in upgrading any financial stock.
It was only a half-dozen months ago that we were told by many that the downgrading of MBI and ABK from its triple A rating would result in a catastrophic unwinding of credit default swaps and other derivatives. Already, MBI has been downgraded twice.
We've been lied to for more than two years by the President, the Fed Chair Bernanke, NAR, NAHB, the Treasury Secretary Paulsen, and just about every other market participant with a stake in the real estate industry and the survival of our financial system.
Have we reached the point where we should believe Citibank?
The latest ploy of the banks have extended mortgages on condos in florida is not to take title of the property. In this way they are trying to NOT take these assets on their books and sell them in that way they do not have to take the loss. Additionally they in the meantime do not have to pay for the taxes and mtce. Also they are not agreeing to sell prices that are being short sold as they do not want to take the resulting loss which will be as much as 50c on the dollar. This is what the banks are hiding. The assets on their books that are marked down 25% need to be marked down substantially more.
That's fine a several hundred point increase and forward moving market and leh at 30-35 will price those 20 dollar jan 2010 puts around a buck. I have 10,000 shares at 26.08 and for 10k I can protect my downside put this one on auto pilot and let her roll. I have already wiped out tons of covered call prem. and offset my cost basis. I have been trading calls on this position last week, loving the IV.
I bought the whole sector last week
Threw some F and a couple of dry shippers in there. Also DTO and AMR married with CC's for the last two month returning 10% and giving me a CB of 4.59 >:)
Bubble, you're wasting your time with this one.
Didn't I see you on the CFC board last year? Or was it homebuilders? I know that I've seen you circling some of the same carcasses as me.
Are you on the tickerforum under a different screen name?