Hedge Fund Makes Huge Bet On Flagstar Bancorp

Would you invest almost all of your money in Flagstar Bancorp? Managing investment risk through diversification is often cited as one of the most important rules for successful investment.  The future performance of a company is impossible to reliably predict since it is subject to countless unknown variables. Since the future prospects of a business […]

Bank of America Has Built a “Fortress Balance Sheet”

A short number of years ago, no one in his right mind would have associated the term “fortress balance sheet” with Bank of America.   During the financial crisis, Bank of America was forced to accept a massive $45 billion bailout from the U.S. Treasury.  As the financial system imploded during 2008 many people wondered if […]

Fed Says Largest Banks Would Lose Half Trillion Dollars Under Adverse Economic Conditions

Based on the results of the Federal Reserve’s stress tests, the nation’s 18 largest banks would collectively lose a massive $462 billion under an extremely adverse hypothetical economic scenario. Reflecting the severity of the stress scenario–which includes a peak unemployment rate of 12.1 percent, a drop in equity prices of more than 50 percent, a […]

Fannie Mae Stock Soars As Mortgage Delinquencies Decline

Fannie Mae’s recently released Monthly Summary reports that serious loan delinquencies decreased slightly in January.  A single family home mortgage loan classified as “seriously delinquent” is three or more months past due or in the process of foreclosure.  A multifamily mortgage loan is considered seriously delinquent when payments are 60 days or more past due. […]

Bank “Stress Tests” Results Due In March – Don’t Expect Anyone To Fail

Under the Dodd-Frank Act, the Federal Reserve is required to conduct stress tests which are forward-looking exercises to determine whether large institutions have sufficient capital to absorb large losses and support operations under severely adverse economic conditions. The supervisory stress tests include examining capital ratios, revenue and the size of potential losses.  The Federal Reserve […]

The Rally In Big Bank Stocks May Be Over

For over the past year, the stocks of big banks have rallied significantly.  Lower loan losses, a stabilization of the real estate market and a settlement with the government over shortcomings in foreclosure proceedings have all contributed to a growing conviction by investors that the worst is over for the banking industry. Here’s a look […]

2012 Bank Failures Lowest Since 2008 As Regulators Close 51 Banks

During the past five years we have witnessed the greatest financial turmoil since the Great Depression.  Hundreds of giant bank failures rocked the nation, real estate values crashed, trillions of dollars of wealth vanished overnight and millions of Americans lost their jobs.  Although a relative calm has been restored due to unprecedented actions by both […]

Bank Stocks Were 2012’s Best Investment – Now What?

Bank stocks had few friends during 2011 during which time financial stocks plunged by over 18%, even as the S&P 500 eked out a slim total return of 2.1%. As financial stocks dropped last year to levels at which they were selling well below book value in many cases, buyers came back in force.  During […]

Owning Bank Stocks Might Be Better Than Keeping Cash In The Bank

The financial meltdown that began five years ago resulted in widespread financial devastation for millions of Americans.  Retirement and stock portfolios were decimated while real estate values declined by 50% or more in many parts of the country.  The American middle class was shocked as trillions of dollars of wealth suddenly disappeared. The collapse of […]