Continue reading Fed to okay TARP repayment for some banks, appoint a Pay Czar

Fed to okay TARP repayment for some banks, appoint a Pay Czar originally appeared on BloggingStocks on Mon, 08 Jun 2009 10:10:00 EST. Please see our terms for use of feeds.

Remember way back when the U.S. Treasury said it would no longer keep buying toxic assets, but instead would give TARP money directly to the banks to stimulate lending? The Treasury gave 550 banks $200 billion with the understanding that they would use the money to increase their lending.

Forget about it. Banks are not doing what they were directed to do with the TARP money. The U.S. Treasury reported that lending by the 21 largest banks actually fell by 2.2% across all consumer lending categories in February compared with the prior month. Declines were seen in commercial real estate, general business lending, as well as credit cards and student loans. The only bright spot was mortgage refinancing. With the low interest rates now available, refinancing was up 35% in February.

Continue reading TARP bankers are lending less and will prolong the recession

TARP bankers are lending less and will prolong the recession originally appeared on BloggingStocks on Fri, 17 Apr 2009 10:00:00 EST. Please see our terms for use of feeds.

First of all, let me say that Federal law prohibits the disclosure of all bank "stress tests" and bank examinations, so everything said here is pure hearsay.

Nevertheless, we have some good news: Banks are holding up well under Federal examination. All 19 banks will pass their stress tests. The bad news is that they still may need additional taxpayer money.

Continue reading Shh! All 19 banks will pass 'stress tests'

Shh! All 19 banks will pass 'stress tests' originally appeared on BloggingStocks on Fri, 10 Apr 2009 12:00:00 EST. Please see our terms for use of feeds.

Bank of America (NYSE: BAC) CEO Ken Lewis has based what is left of his reputation on the fact that the firm does not need another dime in government money. As a matter of fact, he regrets taking as much TARP cash as he did.

According to Bloomberg, Oppenheimer & Co. believes that "Bank of America Corp., the largest U.S. bank, needs to raise $36.6 billion in equity to bring capital ratios in line with its peers." In this environment, that money is not going to come from the private sector. The only entity with the stones to put it up is the U.S. government.

While the money may not come in exchange for common stock, any instrument is likely to have some conversion provisions, which means that dilution is possible. With a market cap of $44 billion, current Bank of America shareholders will be facing a large haircut if Oppenheimer is right. The stock trades at $7.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Bank of America may need more capital originally appeared on BloggingStocks on Thu, 09 Apr 2009 07:00:00 EST. Please see our terms for use of feeds.

Continue reading Citigroup and Morgan Stanley may add to bank shenanigans

Citigroup and Morgan Stanley may add to bank shenanigans originally appeared on BloggingStocks on Tue, 17 Mar 2009 10:10:00 EST. Please see our terms for use of feeds.

This whole bank bailout mess is getting ridiculous. The newest wrinkle is that insurance companies are getting approval to acquire banks so that they can get a chunk of the TARP bank bailout money. Why we are bailing out insurance companies is a mystery.

Nevertheless, banking regulators last month approved applications from Hartford Financial Services Group Inc. (NYSE: HIG) and Lincoln National Corp Ind. (NYSE: LNC) to become savings and loan holding companies so they can get a bite of the TARP money. In addition, about a dozen insurers have applied for capital injection.

Insurance companies have been seeking federal funds to boost their coffers after large investment losses.

Continue reading Is the bank bailout plan getting out of hand?

Is the bank bailout plan getting out of hand? originally appeared on BloggingStocks on Tue, 10 Feb 2009 12:20:00 EST. Please see our terms for use of feeds.

There is talk by the Federal Reserve, the U.S. Treasury, the U.S. Congress and bankers about creating a "bad bank" and let the government use the next tranche of the bailout money to take the losses from the banks and put them in this bad bank.

First of all, why anyone would want to create something "bad" is beyond a rational person's comprehension. Why not create something "good." Why not take the second half of the TARP money and create a "good bank,"one that is solvent, a bank that everyone can trust, a bank for the future not the past. If we create a "bad bank," there is no future. The money is just wasted again.

Continue reading Create a 'good bank,' not a 'bad bank'

Create a 'good bank,' not a 'bad bank' originally appeared on BloggingStocks on Mon, 26 Jan 2009 15:03:00 EST. Please see our terms for use of feeds.