cayale

I think she has provided some of the most candid, insightful commentary on the bank bailout process. http://www.nytimes.com/2011/07/10/magazine/sheila-bairs-exit-interview.html?_r=0 I'm invested heavily in BAC but that doesn't mean I think the right things happened in 2008. Maybe I am naive but I believe all the banks should have simply been exposed to the same FDIC receivership process as banks always are - protecting counterparties and depositors and imposing losses on shareholders and bondholders. She's a blowhard and she's provided insightful commentary. They're not mutually exclusive. In terms of what should have happened in 2008, I am a firm believer in who's to know what was the perfect thing. Those were dark days and looking at things 4-5 years after the fact is easy. I would have preferred certain things were done differently too, but I can't cast stones. I had some tangential involvement in certain matters at that time and all I can say is it was a complete and utter shit show. People were petrified. No one knew what to do and there was a very real sense that this time it was different. It's one thing to calmly make decisions after the fact while quietly thinking in one's office, but to have to do it on the front lines of a meltdown is something altogether different. I think that at best people can say it would have been great if x, y or z was done, but that it's hard to fault those sleeping an hour a night with the knowledge that the entire world is resting on their shoulders. Oh yeah, it also always helps too when the only words of advice being given are "don't fuck this up". Very well put.

Interesting, though I find her to be somewhat of a blowhard.

My guess is there was an intent (probably by Combs) to buy and hold but his thesis changed. None of the triumvirate appear to be traders.

Bankstocks.com - scan Tom Brown's writings for their technical aspects, not his anti-regulator screed or his investment picks (which in my opinion always run close to the edge) http://seekingalpha.com/article/128284-a-loan-loss-reserve-primer-beyond-simplistic-ratios --is a good example Read US Bank and Viewpoint Financial filings and earnings call transcripts. The former is a super-regional with an ideal community banking mindset; the latter is an ideal community bank in my opinion Like insurance, a lot of assumptions around the accounting (only more financial leverage in a bank). Bankers basically have to be right 98.5% of the time to make money through a cycle, so make sure your managers reflect that understanding. If you are levered and wrong, you are quickly wiped out. And once the market recognizes you need to raise capital, you're basically done.

Yet, that have trouble getting bills passed. Even when something is passed, it is so horribly distorted and full of holes that it is no longer meaningful. Tom Friedman is not my favorite but this piece resonates with me: http://www.heraldtribune.com/article/20120425/ARCHIVES/204251007

"But investors who jumped into the market on his advice would have waited another nine months just to break even. " Seriously, Alice? What kind of monster makes people wait three and a half years to produce a double digit annual return?

There's an app for that!

Thought this was pertinent. http://www.bloomberg.com/news/2012-03-02/buffett-s-insurance-engine-of-growth-set-to-stall.html

Even better are his complaints about Wells Fargo. Apparently being a retail bank has not served them very well over the years. That diversity thing worked out great for Lewis and Thompson.

I wouldn't trust the man to make the tea, let alone manage one of the biggest banks in Ireland. No dog in this fight but that is a great line.

How about, "I care about Europe, nonetheless, stocks are cheap." Largely invested, but keeping a little bit of dry powder around in the event we reach a point of maximum pessimism. Doesn't feel like we are there quite yet. Maybe a default/bank failure will get us there, or maybe it won't.

They've bet the company twice with Compaq and EDS, both to their detriment. It seems the market does not trust them to try and pull it off the third time- for good reason.

Compaq, then EDS, then Palm, 3PAR, now Autonomy. All at silly prices with poorly executed integrations, lost/shrinking business (except maybe compaq). Outrageous.

Granted, some aspects of its business are very difficult and can make anybody look bad. However, I am just amazed at what this seemingly "superstar" board has presided over for the past decade: multiple dumb, overpriced acquisitions, poor execution, a scary battery of executives, pre-texting, in-fighting, the list could go on...

Oy vey. Sorry i took the bait. Returning to lurker status.

Let me clarify: Kraven, I agree with you. I was remarking on the original poster's post. If you look at a Karl Denninger bio, you will see what I mean. It was supporting your argument, not opposing it. Munger, it is not personal. Karl Denninger is no authority on banks. He appears to be a political operative. I have no quibble with your sentiment toward banks. They make me nervous, too, but not for the reason you stated as your premise to not own banks. Blind faith is often misplaced. I own a couple of mutual thrift conversions and some USB; small part of the portfolio. Though I know these big banks are scrubbed clean (relatively clean, anyway), I struggle with purchasing them because of the inherent leverage, the loss of earning power given escalating capital requirements and the sense that even if they are asset sensitive, I cannot help but feel rising rates would damage their business (specifically their loan books). WFC is the one of most interest to me.

Well, looks like my last personal bastion of Fox News-free zones (this board) has been breached. Weeeee.

Karl Denninger- bank stock analyst? I don't think he has done any "homework" on this one. You might consider investigating the issue yourself. Kind of a red herring to premise the argument as anti-bank stock based on faulty information and then conclude you would not want to own them even if that information is false. There are good banks and bad banks, just like any other public company sector, with the difference being the inherent leverage that the banking industry carries.

Can someone show me where this is the case? As I understand it, Tier 1 common is adjusted common book equity capital and has nothing to do with stock market value.

What do you mean? AVS securities on bank balance sheets? Last I checked, a bank's market cap had no bearing on its regulatory capital.

Wish a few of these would fall out of bed and foment some panic.

The best part of this thread is the ad popping up for Sober College. See you there, lushes!

Exactly. Just dumb speculation.

It will be way too late then. This smells awfully, awfully fishy.

In my opinion, it is far fetched. The world lurched toward more regulation as the result of crisis, but there is no popular mandate to permanently socialize credit and consolidate payment processes, ID and social services across the spectrum. Who really believes, deep down, that credit and risk should be untethered? Who is demanding this? From a regulatory perspective, my guess is that things calm for the next few years as the pain of the crisis fades. A few more palpitations and I suppose we could get there, and admittedly memories are short, but I think it is unlikely that we will experience something like this again for at least a decade. Let's just say that everybody else had to raise capital. That would raise the cost of capital and therefore require higher returns on said capital, not lower ones. One could argue the cost of credit would rise (as it became more scarce, unless otherwise mandated), and AXP would be at an advantage under such circumstances. And it's already leveraged 9x today. Credit card issuers already carry a lot of capital. Again, in the States, Congress just passed the CARD act. In their minds, mission accomplished. I do not think this will come up again for a while. We might move toward the scenario that you describe but: 1) you place way too much faith in government's ability to execute; 2) there is little chance industry will elect to fuse with social service entities unless it is a) profitable or b) mandated. Even if there were the option, people like their AMEX rewards and refunds. It is a buying club in some ways like a Costco. Merchants may balk, but particularly with AMEX, the processor does supply some value-add that justifies a discount. The merchant doesn't have to finance the sale. AMEX has affluent cardholders. The merchant gets marketing support and access to valuable data. Nobody has a legal obligation to accept AMEX and many merchants don't. AMEX is a bit different. All of that said, I think there is risk that the government could try to regulate discount rates like they are proposing to do on debit cards. I simply think the legal footing for doing so is less stable than debit.