Mr Cooper Group Inc (COOP)

[germanycircus]

Hmmm. I think I'm missing something. And it's not that I'm saying you're wrong, I probably just don't understand banking that well.

Now I understand that the dividends payable creates a liability if dividends have been declared, I'm just having trouble with the leveraging part.

My understanding is that for every $100 of deposits, the money supply expands to $1,000 if the reserve is set to 10%. That's because $900 gets lent out deposited into another bank, which in turn lends out $810, which in turn lends out $729, $656, etc.

I guess, as an aspiring accountant, I can't really wrap my head around the journal entries for the scenarios you are describing. I get about this far:

Dr. Cash 4B
Cr. Preferred Stock 4B

Dr. Dividend declared 280M
Cr. Dividens Payable 280M (a true liablity)

What I don't understand is the 40b part. As I see it, they can only lend out 3.6B (90%), and therefore, if I were to acquire 40b, I would have to borrow it, which doesn't really translate into liquidity as you've described it.

So, reiterating, I'm not saying that you are wrong, but I am saying that I don't understand. I'm not being facetious in any way. I've seen this idea of leveraging in previous posts, but I never got it then either. Can someone spell it out for me?

Thanks,