After getting pounded during 2011, bank stocks have soared this year, especially after the Federal Reserve completed its “stress tests” and said that almost every big bank could survive “extremely adverse” economic conditions. During 2011 bank stock shareholders experienced the biggest price declines since the financial panic of 2008.  As worries mounted [...]

Right or wrong, most consumers have an overwhelmingly negative opinion about big banks.   According to a survey by Research and Markets, 86% of social media comments about U.S. and European banks are negative. The negative perception of big banks by the public has become so pervasive that most bank executives probably just ignore it at this point.  Big bank CEOs pained by their [...]

Three years after the height of the financial crisis, the issue of impaired assets on bank balance sheets remains a major risk to the health of the banking system. Regulators have allowed banks to avoid taking losses on impaired assets by not requiring mark to market accounting.  The extent of overvaluation on bank loans can be seen every time a bank fails and the FDIC has to routinely [...]

After rallying last fall, many of the big bank stocks have seen substantial declines from the beginning of the year. Growing fears about the health of the banking industry are discussed in the latest Economics and Mortgage Market Analysis issued by Fannie Mae.  Fannie Mae cites a very weak housing market and an economic slowdown as the primary factors for worries by regulators [...]

On March 21st, Citigroup announced a 1-for-10 reverse stock split, effective May 9, 2011. According to Citigroup CEO Vikram Pandit, “Citi is a fundamentally different company than it was three years ago.  The reverse stock split and intention to reinstate a dividend are important steps as we anticipate returning capital to shareholders starting next year.” The reverse [...]

Despite the public uproar over the bailout of the financial industry, the U.S. Treasury is no pushover when it comes to demanding stiff terms on its loans. The returns on some of the loans made to various banks and financial institutions would make a payday lender blush.  For example, when the U.S. completes  the sale of its remaining warrants of Citigroup, the Treasury expects [...]

One West Bank, newly chartered in early 2009, is the banking industry’s biggest success story. At a time when many banks are failing or struggling with nonperforming loans and slow growth, One West has earned almost $2 billion in profits for its founders by acquiring three failed banks, including giant IndyMac Bank  which failed in 2008. One West Bank’s phenomenal [...]

Citigroup Faces Tougher Government Regulation Citigroup, probably the most financially challenged of the major banks, is facing increased regulation by the FDIC.  In early June, it was noted that FDIC Chairman Sheila Bair was becoming increasingly frustrated with Citigroup’s management and their inability to implement changes necessary to strengthen the bank. At one point [...]

In a recent interview with Forbes, FDIC Chairman Sheila Bair readily acknowledged that the primary reason for banking losses and failures was due to banks taking on excessive risk in their loan portfolios.  Chairman Bair also discussed her ideas on regulatory changes that will prevent a future banking crisis, the health of the FDIC insurance fund and the FDIC exposure to Citigroup. Forbes [...]

Despite Government Aid, Citi Still Lags The Wall Street Journal is reporting that earlier this year the FDIC had attempted to have Citigroup’s financial health rating lowered to the point that would have resulted in Citigroup being added to the Problem Bank List. By lowering the rating on Citigroup, regulators would have been able to exert greater control over Citigroup’s [...]