The relaxation of fair-value accounting rules won’t prevent bank shares from falling because growth in bad loans is accelerating, according to Goldman Sachs Group Inc.
“Our core view is that banks will not bottom until underperforming asset growth decelerates,” Richard Ramsden, a New York-based analyst at Goldman Sachs, wrote in a report today. “Loans are going bad faster than banks earn money.”
Bank stocks in the Standard & Poor’s 500 Index advanced 4.2 percent yesterday after the Financial Accounting Standards Board relaxed so-called mark-to-market rules that Citigroup Inc. and Wells Fargo & Co. said don’t work when markets are inactive.
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