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Posted
Oct 23 2009, 02:11 PM
by
Ken Kam
Rating:
Money Blog: Top Stocks Blog - MSN Money
Banks are reporting great earnings. But this is to be expected because making banks profitable is the most politically palatable way for the government to recapitalize the banking system. The government accomplished this by holding interest rates that banks have to pay on their deposits to almost zero and relaxing the accounting rules so they don’t have to be diligent about writing off their bad loans. It looks to me like the plan is working. If this continues, the banks will make enough money to earn their way out of the bad loans that are still on their books. Some banks are putting their executives’ interests ahead of their shareholders’, by using the lion’s share of the profits to pay record bonuses. Other banks are using the profits to do things more in line with their shareholders’ interests — paying back TARP, making acquisitions, and rebuilding their capital without diluting shareholders.
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Posted
Oct 21 2009, 09:15 AM
by
Jim Jubak
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Finally, someone with real power in the current financial world has stated the obvious: The world's big banks need to be broken up into utilities that do what you and I think of as banking, and speculative trading companies that take risky bets on the markets with their own money.
The speaker of such truths: Mervyn King, Governor of the Bank of England.
Proposed market reforms, including rules that would require banks to raise more capital, don't address the basic danger posed by banks that are too big to fail, King said in a speech on October 20 in Edinburgh.
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Posted
Oct 16 2009, 06:28 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
The Dow Industrials tumbled back under the psychologically important 10,000 threshold on Friday after some surprisingly bad news from the banks jarred the bulls out of their complacency.
Bank of America (BAC) reported a third-quarter loss of $2.2 billion or 26 cents per share, falling below the consensus estimate of a 12 cent loss as its consumer credit portfolio continues to deteriorate. Similar problems plagued Citigroup (C) when it reported a 27 cent per share loss on Thursday. The results would've been even worse if not for some accounting trickery surrounding the amount of money set aside for future loan losses.
Remember that it was news the banks had returned to profitability back in March that got the equity rally going in the first place. Now, after a 53% rise in the Dow and a 146% increase in bank stocks as represented by the Financial SPDR (XLF), one wonders: Will the beleaguered financial system deal yet more damage to the real economy as loan growth is tightened and fresh losses recognized? It's too early to say, but the banks are already balking at plans to increase capital requirements. Moreover, there is evidence that the consumer loan delinquencies that have dampened Q3 results are about to get worse.
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Posted
Oct 05 2009, 09:02 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
It seems that Henry Paulson was a bit too optimistic about the prospects of several banks which received TARP funds at the end of last year. The Treasury Department’s inspector general Neil Barofsky reports that the department “lost credibility” when its top officials claimed that the first capital injections from the $700 billion financial rescue were for healthy banks. At the time, Bank of America (BAC) and Citigroup (C) were actually in a great deal of trouble.
The inspector’s report states “Treasury may have created unrealistic expectations about the institutions’ condition and their ability to increase lending.”
It was, perhaps, only a little white lie. Paulson and Bernanke knew that confidence in the credit markets was worse than fragile as the financial crisis spun nearly out of control. They also knew that the TARP was likely to keep large banks from failing, at least for a few months, while the world credit system had a chance to catch its breath.
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Posted
Oct 05 2009, 08:23 AM
by
Jim Van Meerten
Rating:
Money Blog: Top Stocks Blog - MSN Money
Over the weekend, McClatchy Newspapers had two powerful articles entitled "Help with mortgages is difficult to come by" and "Some firms with spotty pasts get tax dollars." The articles expose how firms like Bank of America (BAC), Citigroup (C) and Morgan Stanley (MS) -- firms who were bailed out from the brink of bankruptcy by TARP with billions of taxpayer dollars -- are now abusing mortgage borrowers who are in trouble. The Treasury is doing little, if anything to monitor the situation.
In one case, Ronnie Fruia was about to lose his home when he, his mother and son were all hospitalized. He was recovering from a stroke and couldn't talk, but CitiFinancial sent someone to his hospital room to sign modification papers that didn't even cut his interest rate. State regulators had to step in to get his rate changed from 11.5% to a reasonable 5%.
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Posted
Oct 02 2009, 03:38 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
When Ken Lewis finally leaves Bank of America (BAC), he will get a $125 million goodbye from the financial firm, unless the federal government’s pay czar decides to challenge the package.
Most of the Lewis compensation was set long before the big bank got into trouble and had to take $45 billion in TARP funds, so his employment contract may be sacrosanct. If so, he will get one of the largest severance packages in American corporate history.
According to Reuters, Lewis’ severance package "includes $53.2 million in retirement benefits, mostly from a program frozen years ago, and $72.8 million in accumulated stock and other compensation."
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Posted
Oct 01 2009, 11:42 AM
by
Louis Navellier
Rating:
Money Blog: Top Stocks Blog - MSN Money
Great news this week for shareholders of Bank of America (BAC). Ken Lewis will finally be leaving as chief executive.
Sorry, Kenny. Hate to see you go. Bing: More on Ken Lewis
You want to know how happy BAC shareholders are? When the news hit the wires, the stock traded up in the after-hours market by about 1%. In other words, the bank is already worth $1.5 billion more without him!
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Posted
Sep 29 2009, 10:39 AM
by
Kim Peterson
Money Blog: Top Stocks Blog - MSN Money
 You think banks are strict about lending now? Wait until the FDIC gets done with them.
The Federal Deposit Insurance Corp. guarantees the deposits people make in its member banks to the tune of $250,000 per account. If a bank fails, customers can generally expect to get their money back. Problem is that nearly 100 banks have failed this year alone, and hundreds more are expected to follow in the next few years. And the fund that insures customers' deposits is on its way to broke. Bing: Is your bank next to fail?
So what's the FDIC to do? For one, start milking its member banks for more money.
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Posted
Sep 25 2009, 03:43 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
The federal government’s Shared National Credit (SNC) review for this year found $53 billion in losses on large loans held by U.S. bank organizations, foreign bank organizations, and nonbanks such as securitization pools, hedge funds, insurance companies, and pension funds. The definition of a large loan is one exceeding $20 million.
The SNC said the $53 billion ”exceeded the combined loss of the previous eight SNC reviews and nearly tripled the previous high in 2002.” The study was first done in 1977.
Total credit commitments across the institutions reviewed was $2.9 trillion. The study looked at 8,955 credits extended to about 5,900 borrowers.
The results of the study are certainly an indication that many financial firms will have to raise more capital and that certain hedge funds and LBO operations may be in much deeper troubled that had previously been thought.
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Posted
Sep 23 2009, 02:13 PM
by
Teresa Mears
Money Blog: Smart Spending Blog - MSN Money
Here's a small victory for consumers:
Bank of America and JPMorgan Chase are planning to overhaul their debit card programs, changing the way they credit transactions and allowing customers to opt out of overdraft protection.
We'd like to think they're doing it because that's what the customers want, but they might have been just a teeny bit influenced by moves in Congress to crack down on overdraft fees.
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