Do you know what a QSPE is?

Banks have been using QSPEs to effectively boost their leverage and hence, their return on capital. Without the balance sheet constraints of the old days, banks were encouraged to create assets -- by making lots of loans they shouldn't have -- that could, in theory, be sold off later. It hasn't quite worked out that way.

QSPEs can have legitimate purposes -- but they also can obfuscate the true financial condition of a bank or broker. The purpose is not to simply hide losses off balance sheet, but to get those assets off balance sheet so leverage/Tier 1 capital ratios look better. Essentially you can be much more leveraged than you appear, so that ratios like ROA and ROE look stronger than they would if they weren’t employed.

Some financial gurus wonder if "The migration of exotics to the balance sheet may be inevitable." If he's correct, it bodes poorly a quick recovery for the financials. They have years worth of leveraged derivatives on their books, and writing them down won't be quick or painless.

9th inning? Hardly.