tag:blogger.com,1999:blog-5176837376578141578.post8829125883289922841..comments2023-10-20T04:53:34.865-07:00Comments on Picking Nits: Way to go Kenny!Dennis Santiagohttp://www.blogger.com/profile/14205643659567218089noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5176837376578141578.post-90385049734040406362009-03-30T23:08:00.000-07:002009-03-30T23:08:00.000-07:00Hi. I am an avid reading of IRA. Glad to see you h...Hi. I am an avid reading of IRA. Glad to see you have a blog! Could you answer a simple question for me about "Loss given default".<BR/><BR/>Let me quote the last IRA interview for example:<BR/><BR/>IRA: Well your LGD, what we call "Loss Given Default," was up in the 80's, which is not unusual now as you just were describing the recovery rate. But that's not bad either because the big guys are all 98, 99% LGDs at present, so 80% is stellar.<BR/><BR/>What does a 99% LGD mean? Does that mean that the loss is 99% of the loan? How could that be if most loans are collateralized? The house isn't worth zero. I always thought that typically a banks loses about 40% on a foreclosure. Is this different from LGD? I would assume other readers of IRA would have the same confusion. Thanks.Davidhttps://www.blogger.com/profile/02748470636151914185noreply@blogger.comtag:blogger.com,1999:blog-5176837376578141578.post-44044367398919423472009-03-30T13:52:00.000-07:002009-03-30T13:52:00.000-07:00Dennis, when US Bancorp recently cut their dividen...Dennis, when US Bancorp recently cut their dividend, they came out with this slide presentation.<BR/><BR/>http://library.corporate-ir.net/library/11/117/117565/items/327138/C76B1FAF-2E28-467D-9835-A440EF738574_Dividend_1Q09_Investor%20Presentaton_Final.pdf<BR/><BR/>They highlight their metric of "Return on Tangible Equity" as being tops amongst peers at 24%. How relevant and important is this metric because I've never seen it mentioned anywhere before and you and Chris don't use it on your bank report cards.Unknownhttps://www.blogger.com/profile/08542801042852133148noreply@blogger.com