Tags: staggering | bank | losses

Analyst: Staggering Bank Losses Ahead

By Julie Crawshaw   |   Wednesday, 22 Apr 2009 09:18 AM

Ignore the recent bank shares rally, says Josh Rosner, managing director at Graham Fisher, an independent financial-services research firm.

This is the calm before the storm, Rosner told Yahoo! Finance.

“I think the loss rates are going to be staggering, and I think that’s where we going to realize that the crisis is redoubling upon itself.”

Rosner says the quarter the banks have just reported may be their best of the year.

The reason? Losses on the loans banks made before the housing bubble burst are about to hit, Rosner notes, losses he believes haven’t been accounted for in bank provisions.

“We’re about to see the [losses] really start in earnest,” Rosner says, adding that the bank crisis will spread from 19 or so of the largest banks to all the 8,500 banks in the U.S.

He believes construction and development loans will soon deteriorate as well.

Rosner says the government must realize that it can't save every bank and begin helping strong banks to become stronger and letting the weak ones go, a process he thinks will take at least two more years.

JP Morgan Chase analyst Matthew Jozoff concurs.

In a recent study, Jozoff said he foresees another $400 billion in losses as a result of the continuing credit deterioration, and very likely major new capital infusions needed, Seeking Alpha reports.

“We find that TALF 2.0 is likely to benefit securities with the least amount of writedowns and lowest haircuts — fixed rate bonds and long-reset hybrids should have the most upside,” Jozoff writes.

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Ignore the recent bank shares rally, says Josh Rosner, managing director at Graham Fisher, an independent financial-services research firm. This is the calm before the storm, Rosner told Yahoo! Finance. “I think the loss rates are going to be staggering, and I think that’s...
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2009-18-22
 

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