Have we reached the bottom yet? That's a question that people ask me from time to time. I haven't got an answer yet, but today I have some numbers that may give us an idea. And the preliminary verdict is: No!

Why? Because the commercial banking industry in the U.S. is likely to be bankrupt -- by which I mean its liabilities could exceed its assets -- as we approach the bottom.

Just how bad will it get? It could see 41% of its core capital wiped out by loan losses alone. And when you take into account all the toxic waste and derivatives on the banks' books -- its capital looks mighty thin.

Continue reading Is the commercial banking industry solvent?

Is the commercial banking industry solvent? originally appeared on BloggingStocks on Tue, 07 Apr 2009 12:10:00 EST. Please see our terms for use of feeds.

BusinessWeek reports that former Citigroup Inc. (NYSE: C) Chair Robert Rubin picked Vikram Pandit because Rubin thought Pandit could "drive the vision, drive the execution." I welcome a comment from anyone who can explain what that means. What comes to my mind is that Pandit is going to drive an execution squad behind him ready to gun down anyone who gets in his way.

I am not thrilled with Pandit's ascension and it looks like he is going to turn one of his weaknesses -- a lack of consumer banking expertise in a bank that gets half its income from that business -- into a strength. How so? Pandit looks poised to sell Citi's credit card business. I guess if Citi dumps all the consumer businesses, then he'll know something about the businesses that remain.

To increase the value of Citi's stock, I'd recommend three steps:

Continue reading Three steps for Pandit to lift Citi's stock

Three steps for Pandit to lift Citi's stock originally appeared on BloggingStocks on Wed, 12 Dec 2007 09:10:00 EST. Please see our terms for use of feeds.