Slide 21 of JP Morgan’s fourth-quarter earnings presentation makes for interesting reading.
You can see the whole thing here via Calculated Risk, but here’s the small stuff from the bottom:
Firm-wide Level 3 assets are expected to be approximately 6% of total firm assets at 12/31/08
Level 3 assets, also known as ‘mark to make believe,’ are those in which there are no clearly definable market prices — banks can define the prices based on “unobservable inputs” that “reflect management’s own assumptions “. So, they’re not toxic assets per se, but they still tend to be viewed with suspicion by the market — and at 6 per cent of total assets, they are still what they were back in September at JPM.
Citigroup, incidentally, which has just posted a Q4 net loss of $8.29bn, had $157bn in Level 3 assets as of September. No word yet on any changes.
Related links:
JPM earnings call notes - Calculated Risk
JP Morgan’s ‘mark to make-believe’ assets on the rise - FT Alphaville
Mo’ problem assets, mo’ problems - FT Alphaville
