greedcanbgood

Impact of Obama Plan on Prospect of Big-Bank Breakups

Jasper - look at the spreads on debt issuances by these institutions. This is a good indicator of how the market preceives risk. PNC, BB&T and USB (USB especially) consistently fund debt at a MUCH lower rate than peers. My issue with the chart is that it's sorted by how many "notches" a company's rating was lowered - but one needs to also consider from where it was lowered.

Impact of Obama Plan on Prospect of Big-Bank Breakups

Bad table, not so useful....or at least sorted VERY poorly. Banks like USB, BB&T and PNC STILL are mainting VERY high ratings and generally fund much cheaper thier their respective pier groups. This indicates significantly less risk in these institutions when compared to the rest of the industry. A rising tide raises all ships but the chart/article fail to make note of the converse.

Repaying TARP and the Myth Behind 'Taxpayer' Money

VERY well put...enough said! =)

Break Up the Big Banks

But don't you think that regulation (and rigorous reporting) of the off balance sheet portfolios such as derivatives and credit default swaps will provide the defacto free markets influences you wish to see? Why break up a large bank or break apart the “riskier” pieces? Why not let the market decide what level of risks they are comfortable with?

Don’t get me wrong, I concur with much of your conclusions I’m just fearful of government intervention to create a market that is more “free”.

Break Up the Big Banks

Your diatribe here is fraught with contradictions but let me just pick out one:

“It goes without saying that, in a “free” economy, the government should never arbitrarily limit someone’s income. Free markets should be sufficient in themselves to discipline all pay rates, and enforce strict risk management.
But what happens if the market is not free? What happens if an oligarchic consortium takes control of the financial system? What happens when supposedly “free” markets don’t do their job because they are not really free?”

Your first premise here is that the banking industry is controlled by a handful of banks and by extension competition is limited. I challenge you to demonstrate where this is the case. Go to nearly any town in the US and right by your BofA, Wells, Citi, Chage, USB (pick your big bank here) is a small community bank who offers products/services and rates that are at least as competitive. Most of them are making money and doing well. Where’s the “oligarchic consortium”?

Your second premise (though I didn’t quote it here) is that there are no penalties when the big mucky-mucks make a mistake. Tell that to the executives of Bear, Indy and the others that essentially failed.
So you want government to make sure that there is truly a free market by taking stapes that are anti-free market? Give me a break. Look at history. Even if your oligopoly theory is true they will fail eventually. Why? Free market, baby.

U.S. Bank Shares: Pump Almost Over, Get Ready for the Dump

I’m with Joshua on this one…”borderline reckless”…

Why in the world would a shareholder EVER want the company he/she invests in to be at the whim and wish of the government? There is no contradiction here. If you believe the stress tests (another issue entirely) those companies don’t need additional capital. In many respects, they are raising new capital simply to replace that which the government gave them under TARP.

I don’t have a lot of USB in my portfolio but if they need to dilute my shares in the short term to pay back the TARP (and all its strings) then so be it. If you’re a dividend investor it might not be such a good deal but I’m not. I’m in it for growth and value and USB is among the better financials in that regard for the long term.

Dividend Cuts: Who's Next?

Philipmax - you had me until the last paragraph. Part of the problem is people in general, the legislators and the media not taking the time to 1 - Learn the difference between an investment bank and a commerical bank and 2 - not taking the time to learn about finance in a commercial bank. Banks like USB, PNC and BB&T (perhaps even WFC) should NOT be lumped in with the likes of Citi, Bear, Morgan Stanley and others.

USB, PNC and BB&T have been especially prudent in their lendind and credit portfolios and while certainly they are experiencing an increase in losses they are occurring at a fraction of most other financial institutions. They say that a rising tide raises all ships and it appears that the converse is true. That said, not ALL the ships should be scuttled.