Bear Stearns was making money, they were killed by a run on the bank.
I ask you this what is the real networth of Citigroup? My contention is no one really knows but it is probably less than zero
Why do you think it's less than zero?
Easy. Lack of mark to market accounting.
If banks were valuing their assets (loans) on a mark to market basis the write offs would be HUGE.
Now I started by conceding that I do not know the exact amount and no one does. The lack of transparency is why I have so little faith in the current market.
We should have never abandoned the 20% down rule. We are paying for it now and for the next decade.
Very simple. Loan losses (not yet realized) probably exceed capital.
If I had to guess, I’d guess JPM and GS are the only big financials that are not underwater.
Sure, maybe the others might earn their way out of the hole before the day of reckoning but it is a shame that all that capital can’t go to productive activities including prudent banks instead of this long drawn out bailout and fraud.