Tom Lindmark

Banking Sector: A More Balanced View Is Needed

Missed that one. I always end up swimming against the current.


On May 24 05:07 PM Alan Young wrote:

> Tom, thanks for bringing balance to this discussion. It is quite
> rare. I guess you didn't get the memo about hysteria being the best
> way to win a following?

What Else Are the Banks Hiding?

Matt,

I don't disagree with your points. In fact if you look at some of my other posts you will see that I subscribe to the position that the banks are generating exceptional amounts of net interest income (hard not to given the yield curve).

My concern is that the embedded losses in their balance sheets will overwhelm them before they can earn their way out. I think Wells is probably better than most of their peers but still questions linger. If more information was available -- reliable information not the banks' interpretation -- I could make a reasonable judgement.

As it is I remain hopeful and skeptical. Too many recent surprises that I just can't shake.


On Mar 26 10:44 PM MattZN wrote:

> The media tends to focus only on the negative aspects of the banks.
> They don't seem to be able to spend even 10 minutes reading a 10-K,
> so most people never hear about the positive aspects.
>
> Take Wells Fargo for example. Due to new government rules Wells was
> able to combine Wachovia's tax asset (tax carryover) with its own
> tax liability (taxes owed), turning something like a 4-5 billion
> tax bill into an 11 billion+ tax carry over that will zero out Wells
> Fargo's taxes for one to two years. It's right there in their 10-K.
>
>
> Another example is the net interest margin. Big money center banks
> like Wells are increasing their deposit base by leaps and bounds.
> Those deposits cost the bank 1-2% in interest paid to depositors.
> At the same time the bank is turning around and originating mortgages
> at 4-6% with that money. Wells has one of the highest net interest
> margins in the business right now.
>
> A third example would be mortgage refinances and originations. Refi
> activity is the highest ever recorded right now. Each refi brings
> in significant income in fees to the bank, removes the original loan
> from whatever securitzed vehicle it had been sitting in previously,
> and puts serious money in the pockets of large numbers of middle-class
> families which I guarantee you they will be spending at least some
> of. And we aren't talking about one-time here, we are talking about
> improved cash flow for millions of Americans.
>
> The question has never been whether there would be mortgage losses
> or not. Everyone knows there will. The question has always been whether
> the banks can cover those losses with earnings. In fact, I think
> Wells has a pretty good handle on that, making it rather silly to
> price its stock as if it were going out of business.
>
> Just looking at the negatives will not give you the whole picture.
> The media has been focused almost entirely on the negatives for the
> last 6+ months.
>
> -Matt

Banks: Nationalize, Cleanse and Get It Over With

mikeg3,

No book to talk. Not short or long any banks.

I had great experiences as a banker just didn't play the political game well. I spent most of my banking carreer with BofA and BNP-Paribas.

Citi: Off the Banking Reservation

Oregonrain,

Your comments were well put. I tend to disagree on the cram-down issue but you stated your position well.

Boot Camp for Subprime Loss Mitigation - Housing Tracker

What isn't the NAR lobbying for? Sounds as if they might want to bring back liar loans. I'm not sure that the tax code didn't contribute to the current problem so I question the logic of further subsidising housing. Here's a link to my blog which will get you to a really good article on this subject by Thomas Palley-blog.metro-real-estate...

Saving the Economy with IRA Funds

Got to agree with most of the comments that this is a bad idea. Let's not compound the problem by raiding retirement accounts.

Wall Street Breakfast: Must-Know News

So Fannie loses a couple billion and the regulators lower their capital requirements. Brilliant!

"Pick-a-Pay" Defaults Deepen - Housing Tracker

Pick-A-Pay mortgages or Option ARMs are without a doubt the next shock for the system. In my opinion, we are probably over the hump with regard to subprime loans but are just at the starting gate for Option ARMs. If you have time visit this link- blog.metro-real-estate... an article on them as well as a couple of interesting graphs which show the timetable for Option ARMs to begin adjusting and the concentration of this product by state. You can also go to my blog which is listed above and just type in Option ARM in the search box.