In light of the recent fraud suit against JPM over Bear Sterns, I thought it might be wise to take a look at the other players in this bucket of unprotected mort securities.So far, the JPM stock price has not been harmed by this but that is because they continue to have a much healthier balance sheet. JPM also bought WaMu which likely had the same problem as Bear so there is probably another suit in the future for JPM.In contrast, I think the biggest concern for all players is the purchase of Countrywide (the largest and probably worst player in this market) by B of A. The balance sheet of BAC is much worse than JPM so the likely suit to be brought against BAC could smack their stock price for double digits. Countrywide sold over $400 billion in such securities during this time - twice what Bear Sterns did - so the suit against BAC could top $50 billion which is half of their market cap.
So far, the JPM stock price has not been harmed by this but that is because they continue to have a much healthier balance sheet.I wouldn't trust JPM's balance sheet.
I trust it as much as I would trust any corp balance sheet.It pays to do your own due diligence. Look at their number of new accounts or new households. Look at their balance growth. Look at their lending to small businesses. These days, look at the customer service scores (an indication of the willingness of people to look past fees to keep their relationship).All those can be strong indicators of a health and likely accurate balance sheet.
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