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Posted
Oct 09 2008, 06:43 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Henry Paulson watched the Brits come up with a new plan to save the banking system before he did. He is probably embarrassed by that. He and Bernanke seemed to have a big lead over everyone else in building Lego models for saving the financial world.
The latest idea if for the Treasury to actually buy equity in banks thereby mainlining capital into large financial institutions in the hope that they will then lend that money out.
It would be a fabulous and daring program if it made any sense. According to The New York Times,"Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system."
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Posted
Oct 07 2008, 11:09 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
Last week, by its own account, Wachovia was a breath away from failing. Today, two of the four biggest banks in the country are literally suing each other for the right to buy the troubled Charlotte-based lender.
As I write this morning, Wachovia's fate is unknown. Whether that will be the case by lunchtime is anyone's guess.
By all accounts, Wells Fargo's bid makes more sense, it being the far stronger firm and eschewing the FDIC's involvement in the transaction. Citigroup, however, has yet to capitalize on the bank firesale its competitors are taking advantage of, and it doesn't want to miss the party.
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Posted
Sep 24 2008, 10:20 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
Despite all the rhetoric and worry Congress will not formulate a deal that goes through this week, financial stocks were generally higher today. Part of the reason is the change in rules by the Federal Reserve that allows private equity investors and other groups to take positions up to 33% (including 15% voting shares) in financial companies. Previously the limits were 25% and 10%.
This is a step in the right direction, according to Steve Schwartzman of the Blackstone Group, but private equity needs to be able to take larger chunks and even make acquisitions. It is unreasonable they would make large investors only to be minorities with limited voices on boards.
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Posted
Sep 07 2008, 09:40 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
Now that the Federal Government has taken control of Fannie Mae and Freddie Mac, what happens next?
Futures trading in U.S. stock indexes suggests the stock market will start the day with a huge rally, with the Dow Jones industrials up at least 250 points, a gain of at least 2%. Asian markets were higher today, and bank stocks in Asia and Australia were higher.
This seems to fly in the fact of such market bears as MSN Money columnist Bill Fleckenstein, who sees more stress ahead for the markets because the economy is so dicey.
Assuming the market moves higher on the day, the big question remains: How much higher can stocks move and for how long?
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Posted
Sep 05 2008, 07:05 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
If the markets are to take bond guru Bill Gross at his word, the world's financial markets could go through a cataclysmic failure. The head of fixed income fund operation Pimco says that a rapid sale of assets by banks, brokers, and hedge funds will cause the credit system to collapse. Almost all of these companies need cash and none of them wants to be left holding the bag if housing and commercial markets go to pieces.
The unusually eloquent Gross recently wrote "This rarely observed systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time. Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami."
Gross wants the US Treasury to move into the market and buy distressed assets to stop the knife from falling.
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Posted
Aug 08 2008, 08:34 AM
by
Todd Harrison
Money Blog: Top Stocks Blog - MSN Money
This morning, Fannie Mae joined its smaller cousin Freddie Mac in announcing losses that exceeded Wall Street's already dour expectations.
The company lost $2.3 billion in the second quarter and plans to slash its dividend to a paltry $0.05 per share, down from $0.25, according to Bloomberg.
All eyes now turn to Paulson, who just weeks ago asked for -- and received -- a blank check from Congress to support the beleaguered government sponsored enterprises, should the need arise. He had hoped the mere existence of the backstop would calm Investors' nerves such that he wouldn't need to step in.
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Posted
Apr 14 2008, 02:58 PM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Early indications from companies like Wachovia and General Electric show that the last half of March may have been tougher on bank earnings than Wall Street expects. Bloomberg recently reported that Citigroup, JP Morgan, and Wells Fargo could all miss consensus estimates. But by how much?
A look at the spread of Q1 estimates gives some hint about how far off actual numbers could be compared with investor expectations. At Citigroup, among 15 analysts polled by First Call the average EPS estimate is a loss of $.95. But, the lowest estimate is a loss of $2.24. At JP Morgan, the average figure from fourteen analysts is $.66, but the worst case is a loss of $.11. For Wells Fargo, twenty-three analysts have an average forecast of Q1 EPS at $.57, but the low number is $.45.
The huge discrepancy among the numbers should be troubling to shareholders because recent information would argue that share prices for most banks and brokerages may still be way too high.
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