This has to be the quote of the day from Daniel Gross of Newsweek:
Having utterly failed to predict the trouble they encountered in the summer, bank CEOs are nonetheless assuring shareholders that the worst is over, and that the trends that hurt them this quarter—problems in subprime, concerns about consumer credit, and uncertainties about debt extended for corporate buyouts—won’t affect business unduly in the next quarter. "We expect to return to a normal earnings environment in the fourth quarter," as Citigroup’s Prince put it.
I suspect banks will, like housing, be experiencing a new "normal" in the fourth quarter. The train hasn’t left the station, we’re still waiting for it to pull in.
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They are passing out the Kool Aid.
I wonder how many people will line up with their cups.
Well if they had the capital to sustain the hit of selling off all their sub-prime CDOs at a discount then honestly they should really be fine. I’m being serious, it’s the smaller banks who are going to feel it the worst because they are too leveraged to take a hit that big.