Kashkari Urges Banks to Sell $200BN in Stock ‘Now’ to Survive the Coming Crash and Avoid Another Bailout

By Tyler Durden | 16 April 2020

ZERO HEDGE — Yesterday, when looking at the latest credit loss reserve numbers from America’s top banks which amounted to $27 billion among the big 7 banks, a number which was understandably 4x greater than the total provisions set aside a year ago…

… we said that despite the significant increase (mostly at JPMorgan which traditionally has been one of the most conservative banks), the number won’t be nearly sufficient by the time the corona-cession is over. Why? Because as we also showed, the last time the US economy suffered a horrific recession, similar to the one right now, the total loan loss reserve to total loans ratio soared to between 4 and 6%. It is now only between 1.5% and 2.5%.This also explains the reason why banks did not want to discuss what their future loan loss provisions would and could be – because they know very well that if the financial crisis is a template, there is a long way to go before banks are properly provisioned and the cost of this provisioning would be billions in losses as well as billions in new capital. As an aside, BofA CFO Donofrio was almost angry on a few occasions when responding to questions how much more reserves in Q2 the bank would need, saying the bank reserves based on what we know at the moment, and that if he knew how much higher reserves would be he’d “add them now.” […]