Archive for JP Morgan Chase
Now that the vote to close off debate on the huge financial regulation bill has passed by 60-40, voting on the bill will come very soon, and that raises concerns from banks like Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) on whether or not the inclusion of the provision from Democratic Senator Blanche Lincoln will be passed with the bill, which would force banks to spin off their swaps desks.
Federal Deposit Insurance Corp. chairman Sheila Bair has already weighed in on the matter, telling politicians they need to “really think hard” about allowing that to become law, as it could have a devastating effect on revenue and earnings, while actually probably increasing, rather than decreasing risk.
When you add up all the regulations already in place, having taken away a lot of the fees which had helped banks to be profitable, if you add this to it, you do have to wonder if lawmakers are going to destroy, rather than help the financial institutions.
So far the news seems to be good in regard to this provision, as it seems there is enough opposition to keeping it in the final bill, although you can’t count on anything until it is finalized.
While there was definitely a need to look over the banking industry and make some changes, the numerous amendments to this bill could, taken together, be as devastating, and probably more so, than forcing banks to spin off the swap desks.
The problem is this is an election years and the politicians are already under fire for their outrageous spending and bailouts, and they think by looking tough on the banking industry they’ll win over voters. Unfortunately it could very easily end up backfiring on them, as the usual unintended consequences always emerge after the fact, and that will be the case here, depending on what the final bill looks like and what’s included in it.
This is part of the reason banking stocks have been hit hard, as the uncertainty of when it is going to pass, along with the fears on how it will affect the banking industry, has investors on edge, along with the many other factors weighing on the sector.
It’s going to be a rough and uneven ride for financial institutions in America for some time to come.
This article (Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS) Could Get Crushed if Forced to Spin Off Swaps Desks) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
As the European sovereign debt crisis continues to unfold, it is increasingly obvious from the width and depth of the irresponsibility of all involved, that banks like Citigroup (NYSE:C), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and JPMorgan (NYSE:JPM), which are getting hammered today, will suffer from the shoring up of the socialist, progressive, welfare states of Europe, whose citizens they’ve socialized into thinking the rest of us should support their above-market wages, perks and lifestyles.
That fantasy is ending, and it could bring down the economic system as we know it, and make the last several years look like “happy days are here again.”
This is the reason the Federal Reserve has already tried to convince Americans they’re protecting U.S. banks when they provide funds to bailout Europeans. These banks acquired the bonds that allowed these types of lifestyles to continue, and now that is being given as the reason we should help bail them out.
What they’re not addressing is the real reason, which is the socialist, redistribution of wealth, which takes it from the productive and gives it to the unproductive. This is why there is growing unrest and danger in Europe, as they’re like rich kids that are getting cut off by their parents, which now have to go out and make it on their own, and consequently throw tantrums because that now have to learn to live within their means.
Another reason for the bank stocks getting hit hard is the uncertainty concerning the banking regulations and how far they’ll go, and whether or not they could hurt the revenue and earnings for them.
Once that is clarified, investors will have a better picture on the future performance of the giant banks, and know whether or not to put their money into them.
It’s hilarious to see Europe try to blame this solely on the banks, although they do have culpability in the matter. This is being done because of the public sentiment toward banks, which if the politicians can paint as the bad guys, will take the focus off of them, who refused to operate within the economic guidelines all of the European Union had agreed to.
The banks and politicians were in this together, but the politicians are trying to blame the banks to save their jobs, so they’re trying to retain the favor of the public.
Austerity measures being forced upon any European country that wants to get bailed out, is harming the banks at this time, especially those with the largest amount of exposure in the region.
Of course there are numerous other variables for the major U.S. banks, and it would take a book to talk about them all. The point of this is Europe has revealed the soft underbelly of the practices of banks, and to continue to buy up dubious debt will continue to cost them until they drop the practices and start operating like private businesses trying to make a profit, and not as charity organizations which provide funding beyond what the market can handle.
That’s why Europe is on the brink, they are living beyond the means of what the market can sustain, and now it’ll have to pay for endless printing of money and buying of debt which they will probably never have paid back to them. Europe is increasingly looking like a third-world region, and banks need to take that into account if they want to survive as viable and real businesses in the future.
This article (Blood in the Streets for Citigroup (NYSE:C), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and JPMorgan (NYSE:JPM)) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) are the recipients of Build America Bonds offered by the state of Pennsylvania, generating $1 billion for the commonwealth.
The Bank of America part of the bonds are what is called ‘true interest cost,’ which was valued at $548.9 million. JPMorgan Chase received the tax-exempt part of the offering, valued at $451.1 million. The interest cost for Bank of America was 3.33 percent, while the true interest cost of JPMorgan was 2.51 percent.
True interest cost means the banks will receive a 35 percent interest rebate from the federal government for participating in the bonds.
The last competitive bond sale from Pennsylvania was initiated in the middle of January, 2010, where the state offered $900 million. Barclays Capital was awarded both the Build America and tax-exempt portion of the bonds.
Moody’s (NYSE:MCO) and Fitch Ratings weren’t particularly impressed with the bonds, both having a negative outlook on them. The negative outlook is from the drop in fund balances because of tax collections declining for the state. In April alone, taxes were 12 percent below estimates.
Notes from Pennsylvania are rated at Aa1 by Moody’s,AA+ by Fitch, and AA by Standard & Poor’s.
Pennsylvania will use the money generated from the bonds for the improvement of sewage systems, construction, environmental preservation and renovation projects.
The state now has about 2,000 construction projects active at this time, and the money raised will give them about six more months of cash flow to work with.
Too bad they don’t take cutting their state budget, something responsible people would have done. It’s an election year though, so they don’t have the courage to do the right thing.
This article (Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM) Awarded Build America Bonds by Pennsylvania) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.