Seeking Alpha

With Dodd-Frank all but eliminating risk-taking, a sagging housing market, and a weakening...

With Dodd-Frank all but eliminating risk-taking, a sagging housing market, and a weakening economy, investors are avoiding bank stocks despite apparently dirt-cheap valuations. Just ask David Tepper, who wishes he would have thrown in the towel.
Comments (2)
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
    Tepper was simply too early in the process and has a very short hold horizon. Not all bank stocks are destined to end up in the garbage. The TBTFs have a whole lot of political and regulatory risk and the smallest institutions have the highest geographic, real estate concentration and management risk. There will be some winners and some losers in all segments but the middle of the size range will have the most winners because they are outside of the two aforementioned problem areas.
    9 Jun 2011, 11:42 AM Reply Like
  • Duude
    , contributor
    Comments (3389) | Send Message
    There is a big problem with low bank valuations. Bank leverage has to reduced in response to their dwindling equity. While this sounds like a win-win if we really want to see them reduce their risk, it means banks have to raise capital through more nickel and diming of those with smaller balances so they can offer better deals for those with bigger balances. We can also expect loan fees to rocket for all borrowers. The debit card swipe fee issue only makes all of this even worse.
    9 Jun 2011, 01:08 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs