Banks Must Brace For New Losses

``The official FDIC Banking Profile report from the fourth quarter of 2009 reveals that failing loans have risen faster than reserves. The big banks cannot bring in new capital (from TARProgram, USGovt-sponsored carry trades, or equity investors in Saudi Arabia) to match growth in their losses. This has caused the ‘coverage ratio’ to plunge below 100%, cut in half since 2005. It is below 80% actually (shown in red). The big banks must dig into earnings to build loan loss reserves. Case in point JPMorgan today, adding $4.2 billion into loss reserves. Case in point Capital One yesterday, reporting credit card charge-offs of $526.5 million. Banks remain behind the curve. ''