So far, the analysts that have been the most negative on banking are sticking to the script. Meredith Whitney continues to hammer the large banks day in and day out, and Mike Mayo, the former Deutsche Bank analyst, is also quite negative.
Mayo, currently at Calyon Securites, said in a new note that while certain mortgage assets have been written down heavily, other loan assets are just starting to feel the pinch.
Bloomberg: Mayo said in the report that he expects loan losses to increase to 3.5 per cent by the end of 2010. Mortgage-related losses are about halfway to their peak, while credit card and consumer losses are only one-third of way to their expected highest levels, Mayo wrote.
The changes to mark-to-market accounting rules will impact banks’ balance sheets by one-third or less and will have no impact on the economics of bank troubles, Mayo wrote. Banks committed the “seven deadly sins” of banking in trying to compensate for lower natural growth rates and will now feel the costs of those actions, Mayo wrote. Read the whole thing >