Citigroup (NYSE:C), Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) are facing extraordinary losses in relationship to mortgage problems, and it appears it may be far worse than is being taken account of analysts and pundits are taking account of or understanding.
The underlying problem is the shadow inventory held by the banks, as they are looking at huge exposure because they are struggling to get control of delinquent mortgages and the properties.
If they aren't able to bring these properties to the market in an efficient and timely manner, they will continue to lose on the loss in value in the properties as they sit vacant and face the resultant consequences that come with that.
The banks also appear to be failing to take appropriate measures in inadequate loss reserves, or for that matter, loss reserves at all. In other words they seem to be ignoring the problem. Maybe they are comfortable, thinking they'll be bailed out again by taxpayers.
Interestingly, if the giant banks can't bring their inventory to market, it will probably be good for the housing market, even as it is devastating to them.
With the market rallying, it may be time to think of shorting banks in light of these issues. Investing in financial ETFs like (AMEX:RKH) and (NYSEArca:XLF) are other possibilities.
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