It Figures

Does True Competition Among Credit Card Issuers Exist?

The most transparent and objective measure of competition in an industry is the profitability of the participants. Sustained above average profitability is a sign of lack of competition - think drug companies in the '80's and '90's, or MSFT a decade ago.

Given that most credit card issuers are losing money right now, and have for the last year or so, it is hard to characterize the sector as lacking competition in any economic sense.

Folks would benefit from trying to separate their personal "beefs" with these companies from their economic/investment analysis

Treasury Accepts Lowball Price for TARP Warrants

Dear ditto,

And exactly why should the banks that neither wanted nor needed govt. money be required to "open their books" to these bungling power grabbers?

In what world is it justified for the govt. to come in uninvited to dictate terms to private companies, thus robbing shareholders of value?

For those REQUESTING help, certainly the govt. has a right to know the details. But for those resisting gov.t "help", like Wells, GS, State Street, etc., they have no right whatsoever.

PPIF: A Step in the Right Direction - But Not a Cure-All

A possible problem I see is the regulators forcing the banks to accept better but still uneconomic bids for their assets. Using the BNY-Mellon example, suppose they get a bid reflecting a $1 billion discount - above carrying value (-$1.6 bil) but still below the bank's estimate of hold-to maturity economic value(-$535 mil). It is not beyond imagination to see the feds "suggest" they take the bid, thereby enhancing the "optics" of the balance sheet/capital structure but in fact destroying the economics.

Bair mentioned the other day that such desicions would be made "in consultation" with regulators. Being that bank and regulator objectives and motivations differ significantly, and that the regulators hold all the power in the relationship at the moment(via the "stress test"), this could be a bad thing for banks seen to be vulnerable - whether they actually are or not.