After Citi, is Bank of America next?



NEW YORK (Reuters) - A government rescue plan has eased investors' concerns about Citigroup Inc, but mines lurking in the balance sheets of rivals including Bank of America Corp could still tempt short-sellers.

Bank of America, the No. 3 U.S. bank by assets, has loaded up on mortgages as the world's largest economy wrestles with the worst housing market since the Great Depression.

The Charlotte, North Carolina-based bank further heightened its exposure to home loans by acquiring Countrywide Financial Corp, the largest U.S. independent mortgage lender and agreeing to buy Merrill Lynch & Co, which owns the world's largest retail brokerage.

If losses on mortgages and other debt securities mount significantly, the bank may see the ratio of equity to risk-weighted assets, known as Tier-1 capital, dwindle to alarmingly low levels.

"I would expect there are more banks who are in dire straits and more who can expect to be helped," said Michael Farr, president of investment management company Farr, Miller & Washington in Washington, D.C. "The share price makes it look like Bank of America might be next in line," he said.

Before Monday's stock market rally, Bank of America shares had lost 52 percent in November alone, making them the second biggest decliner for the month in the KBW Banks index after Citigroup.

Analysts at independent research company CreditSights forecast that in a scenario where the commercial and residential real estate markets really tank beyond banks' expectations, Bank of America would have a Tier-1 capital ratio of 7.15 percent.

The minimum that regulators seek to consider a bank "well capitalized" is 6 percent, but any ratio near or below 7 percent tends to spook investors.

Bank of America declined comment.

CreditSights also expressed concern about Wells Fargo & Co, which it said would have a Tier-1 capital ratio of 6.98 percent under its worst case scenario. Wells Fargo recently agreed to buy Wachovia Corp.

Under the same assumptions, and before the government's latest investment, Citigroup would have a Tier-1 capital ratio of 8.64 percent.

Wells Fargo, based in San Francisco, declined to comment.

To be sure, by some measures Citigroup looks worse than Bank of America and Wells Fargo, most notably the ratio of tangible assets to tangible equity, a metric on which some investors have focused.

Citigroup's tangible assets are about 42 times shareholder equity minus intangible assets, compared with 11 times for Bank of America.

The U.S. banking system is broadly undercapitalized, perhaps to the tune of more than $1 trillion, and the only investor that can bail it out is the U.S. government, analysts said.

"The banks already have an enormous hole to plug, and the recession will make that hole larger," noted Daniel Alpert, investment banker at Westwood Capital in New York, estimating banks may need to write down $1 trillion more in bad debt, in addition to the roughly $750 billion announced so far.

TOXIC MORTGAGES

Bank of America, through its acquisition of Countrywide, has more than $250 billion in residential mortgages and while it has stopped offering some of the most toxic types of mortgages, chargeoffs in the portfolio are increasing.

Wells Fargo inherited a portfolio of more than $260 billion in consumer loans when it acquired Wachovia, and JPMorgan Chase & Co acquired exposure to some of the most risky classes of mortgages, in addition to its own large consumer loan portfolio, when it bought Washington Mutual Inc.

Still, there are big differences. Critically for Citigroup, investors lost confidence in the company and its management after it failed to buy Wachovia Corp, thereby losing an important potential source of deposit-based funding, analysts said.

"The difference between Citi and the other three is that Citi clearly had more suspect management," said Mal Polley, chief investment officer at Stewart Capital Advisors in Pittsburgh. "They had not done enough to take the fat out of the system and right the ship," he added.

But management at Bank of America and Wells Fargo, and even JPMorgan, widely regarded as the bank that has best survived the credit crisis to date, will need to allay investors' concerns about their capital position as financial conditions worsen.

And if their losses are big enough, or investors fear they will be big enough, Bank of America and Wells Fargo could turn to the same place Citigroup did: the U.S. government.

"I definitely think other companies will need this help," said Paul Miller, analyst at Friedman, Billings, Ramsey & Co in New York.

Copyright 2008 Reuters. click for restrictions

The government of the Northern Territory of Australia is now running "mandatory supervised" COVID-19 quarantine facilities, and there are a lot of conflicting reports going around about what's really happening in these "camps." Are they internment camps, summer vacation spots, or something in between?

On "The Glenn Beck Program" Monday, Glenn and Producer Stu Burguiere discussed the case of 26-year-old Australian resident Hayley Hodgson, who detailed her experience at the Center of National Resilience in Howard Springs during a recent interview with UnHerd. They compared Hodgson's description of the Howard Springs facility to images of bikini-clad Australians in quarantine who appear to be on holiday at the same facility.

So, what's really going on with Australia's COVID quarantine facilities? Watch the video clip below to hear Glenn and Stu break down what we know so far:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis, and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and, live the American dream.

Glenn Beck: Here's how YOU can fix the Great Reset's housing crisis

Photo by H. Armstrong Roberts/Retrofile/Getty Images

How's the housing market looking these days? Because under Build Back Better (aka the Great Reset), investors are grabbing up homes at a record pace.

On "The Glenn Beck Radio Program," Glenn discussed a recent Redfin News report, which shows that almost one in five homes sold in the U.S. during the third quarter of 2021 was purchased by an investment firm, and many are paying tens of thousands of dollars over the asking price.

"Think of that, one in every five homes that are sold are going to a big investment firm," Glenn said. "Investors bought more than 90,000 homes, totaling more than $63 billion, representing 18% of all homes sold in the quarter. The numbers broke all records."

"The same factors have pushed more Americans to rent, which also creates opportunities for investors, because investors typically turn the homes they purchase into rentals," he continued. "And now they can charge higher rents. Rent for single-family homes surged by more than 10% in the 12 months, through September. The fastest annual rent inflation in 16 years."

"And nearly 77% purchased were bought in an all-cash transaction," Glenn added. "That's not your average person. These investment firms, like BlackRock, are going in and buying entire neighborhoods. They are the people that come in, and say, 'I'll give you $70,000 over the asking price.' ... Now, why would investment firms think they will just be able to make money paying $70,000 over the asking price? What is it that they know, that you don't know? Could they know, as the Great Reset states, that by 2030, you will own nothing and you'll like it?"

Watch the video clip below to hear Glenn offer his thoughts on how you can solve the Great Reset's housing crisis:


Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

On "Glenn TV" Wednesday, Glenn Beck exposes the radical plan to flip the United States from capitalism to socialism and into a lawless nation. It's an old strategy that mirrors a communist Cold War playbook. The goal now, as it was then, is this: How do they get a revolution without all that civil war stuff? It’s a five-step plan, and we're deep into several of the main steps RIGHT NOW.

Our justice system has been infiltrated by woke leftists, and something called "the progressive prosecutor movement" is methodically transforming Main Street USA into Main Street Gotham City. We can see it all over the country in places like San Francisco, with the Waukesha massacre as a terrifying glimpse into more of what's coming. And the media? They're currently running interference in one of the largest misinformation operations in history.

It’s happening at the city, state, AND federal levels. And President Trump might be one of the biggest victims of them all, a fact that even Trump critic Joe Rogan has realized on the Russia collusion hoax: “No one is being held accountable!” That ends now, as Glenn calls on Americans to push back on the lies that keep us divided in a cold civil war.

Watch the full episode below:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

A "one-world government" is being formed right now and it’s called the Great Reset, Glenn Beck said on the radio program Monday. And now, rebuild plans for the fire-damaged Notre Dame Cathedral hint at the formation of a global church, too.

In this clip, Glenn detailed plans for the iconic, 850-year-old church’s "woke" renovations that sound more like a 'politically correct Disneyland' complete with a "discovery trail," "emotional spaces," and 14 themed chapels.

"Notre Dame is now being built back better as a 'woke theme park' dedicated to environmentalism and social justice," Glenn explained.

"There will be several different chapels within, [for example] a chapel for social justice, and then chapel for environmental justice," he continued. "Which leads me to this point. The 'one-world government' is being formed, right now. One-world government. It is being formed and it's called The Great Reset."

Glenn went on to predict that one of the first steps in the direction of a one-world government will be a push for a global religion.

"I think we're seeing the first church now being dedicated to the new global religion — and it is social justice, environmental justice, and all this gobbledygook. We all know, it's not just wrong, it is dangerous. That's the first church, the cathedral of Notre Dame, in France, is the first global church. Mark my words. Christian, Jews, Muslims ... this global church will bring darkness unlike you've ever seen."

Watch the video clip from "The Glenn Beck Program" below:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.