Tom Lindmark

Regulatory Reform: The New Geithner Plan

Not bad advice. I agree with a lot of your points.


On Sep 05 04:29 PM Stimpy wrote:

> We are on a path towards a utility model of banking. Banks will emerge
> (as credit is re-privatised) as the central intermediary structure
> in our economy, replacing the non-bank securitizing model.
>
> Banks will continue to use securitization (more of a covered bond
> model with clear, formal reps and warranties) as a balance-sheet
> optimization tool.
>
> We will see a (Fed and Treasury sanctioned) evolution towards 5-10
> large banks with virtually total market share.
>
> These banks will be almost beyond profitable--in a very low risk
> sense.
>
> The economies of scale they will enjoy will allow spread lending
> to sustain profits WITHOUT excessive leverage.
>
> Credit velocity in the general economy will suffer (relative to the
> 2006 orgy-years) as a result, making equities of all kinds a less
> favorable asset class.
>
> Banks will be the one exception; in a sense they will be taxing the
> rest of the economy for many years to come.
>
> These regulations make much of this both clear and inevitable.<br/>
>
> Buy the biggest banks and avoid all other stocks over tyhe medium
> to long term.