On Fri, Nov 21, 2008 at 11:24 AM, Dan M <[EMAIL PROTECTED]> wrote: > I've waited until I was able to get hard numbers on the ratio between total > liabilities and deposits. If we make the assumption (as is true with all > balance sheets) that total assets = total liabilities (equity is counted as > a liability to get this balance...I guess that's why it's called a balance > sheet), we can use the ratio of deposits to total assets to get the ratio of > deposits to total assets.
Actually, no. What balances on the balance sheet is assets with "total liabilities and stockholders' equity". Liabilities do not include equity, but liabilities and equity are added together on the balance sheet. As I wrote previously. > I found this for Chase before and after buying Washington Mutual at: > > http://investor.shareholder.com/jpmorganchase/press/releasedetail.cfm?Releas > eID=337648 > > Before the purchase, deposits were 41% of total assets, and afterwards, they > were 44%. The title of your link is "JPMorgan Chase Acquires the Deposits, Assets and Certain Liabilities of Washington Mutual's Banking Operations". It seems WM was not in any danger of not having sufficient assets to cover deposits, since JPM acquired WM's assets and deposits, and still was in good shape. The chart in your link puts WM's assets (presumably already marked down to some extent) at $310B and deposits at $182B. So WM's assets would need to lose an additional 41.3% to be unable to cover depositors. > But, at > > http://finance.yahoo.com/q/bs?s=jpm&annual > > You have stated, from your experience that deposits are a much smaller > fraction of total liabilities. Much smaller than what? Please quote me where I made the statement you are refuting. Also, if you are interested in JPM's balance sheet, why don't you look at their most recent 10Q filing with the SEC? http://www.sec.gov/Archives/edgar/data/19617/000095012308014621/y72204e10vq.htm#104 Deposits are $970B and total assets are $2251B, so 43% (you said 44% above, but the dates are slightly different so no problem). In other words, JPM's assets would need to fall by 57% before they could not cover deposits. If you are really interested, you could go line-by-line on the assets to try and see what can easily be converted to cash and what is likely to take a hit. But my point remains, that the assets would have to take a huge hit in order to be unable to cover deposits. > It is a > fact that almost half of JP Morgan's assets are now deposits (unless they > are lying of course). Heh, very funny. How about we round the other way and say that almost three-fifths of JPM's asset value would have to disappear before assets would be unable to cover deposits. > I've lived through the crash of '86 in Houston, where banks got no more than > 30 cents on the dollar for many foreclosed properties. Impressive credentials you have there. Would you mind sharing the asset mix of those banks you refer to? Specifically, what percentage of their assets were made up of loans that liquidated for 30 cents on the dollar. Or, if you prefer, what was the liquidation value of TOTAL bank assets as a percentage of book value? > The process took > years. In your scenario, you have people with checking accounts patiently > waiting 2 years before they can write checks again. The government is certainly wasteful, inept, and slow when it gets involved in markets. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
