Banks Have Lost $500 Billion And Counting...

Remember when everyone gasped in astonishment when Fed Chairman Ben Bernanke said that total losses from the credit crisis could eventually sum to a whopping $100 billion? Sadly, those were the good old days.

According to Bianco Research, the total aggregate loss suffered by lenders as a result of the credit crunch has now reached $500 billion. (Bob Eisenbeis at Cumberland Advisors details the Bianco report). If Nouriel Roubini’s right, that means we’re one-quarter to one-half of the way there:

Losses recognised to date now amount to nearly $500 billion and clearly are likely to grow larger as foreign institutions begin to release their second-quarter financial statements. To their credit, the institutions reporting have successfully raised more than $350 billion to replenish capital depleted due to loss recognition.

But a large hole still remains, and there is now reason to suggest that those institutions that have experienced the largest losses – namely Citigroup, UBS, Wachovia, Morgan Stanley, and the others – will need to raise substantial additional capital as a result of having to take nearly $50 billion of auction rate securities back onto their balance sheets as part of the settlements with the attorneys general of New York and other states. Clearly, there are more securities to bring back on balance sheet and Cumberland’s estimates are that they could go as high as $100 billion.

Below is table that ranks the banks by their losses. If the credit crunch were a reality show, Citigroup would be going home with fabulous prizes.


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