After sitting through a number of Jim Rogers interviews on Uglychart a theme which stuck out for me was his warning about financial institutions using "level three assets" to prop up their balance sheets. Level three assets are illiquid, hard-to-value assets that are valued according to in-house estimates (think distressed mortgages and CDOs) which deepens concerns about the transparency and strength of bank balance sheets.
Rogers' belief is that current accounting methods which use level three assets essentially hide potentially destructive future corporate value and we'll be hearing more about this accounting practice come next year when these assets must be divulged. This, Jim Rogers warns, is going to spell (even more) trouble for these financial institutions' earnings growth. Some interesting articles dealing with this topic are here and here.
A notable quote from that second article is this:
"Figures that have been disclosed show Lehman with $22 billion in Level 3 assets, 100% of capital, Bear Stearns with $20 billion, 155% of capital, and J P Morgan Chase with about $60 billion, 50% of capital. However those figures are almost certainly low; the border between Level 2 and Level 3 is a fuzzy one and it is unquestionably in the interest of banks to classify as many of their assets as possible as Level 2, where analysts won't worry about them, rather than Level 3, where analyst concern is likely."