Here come (more) write-downs. The international banking system's been nearly crippled from hundreds of billions in write-downs this year, and there appear to be plenty more on the way, enough in the fourth quarter to potentially wipe out the effects of the $350 billion already spent from the bailout package.
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Oppenheimer & Co.'s Meredith Whitney expects another $44 billion in
write-downs and charges on bad loans in the fourth quarter, with
accounting rules changes on how some financial assets are valued
triggering $25 billion in bad-loan charges over the next 12 months,
according to Bloomberg.
The Obama administration will have slightly less than half of the $700
billion in TARP money, after the additional $20 billion being allocated
to Citigroup Inc., and will likely need it, as analysts predict the banks will
be back with hat in hand in 2009. With financial firms likely to stay
under pressure well into next year, you can expect more pressure to
suspend mark-to-market accounting standards from the banks. On the
other hand, an Obama administration may take a harder line with the
banks when it comes to jump-starting lending as opposed to simply
shoring up their balance sheet or making acquisitions. -
George White
See Bloomberg story
