During 2011, some of the smartest investment pros in the world bet heavily on Bank of America and lost big as the stock price collapsed. Concerns over the looming collapse of the European banking system sent U.S bank stocks into a tailspin as panicked investors sold.  From a price of $15 in January 2011 the share price of Bank of America (BAC) declined to a panic low of $4.92 in [...]

A $25 billion foreclosure settlement reached between the government and the big banks has many wondering who will win and who will lose among the different parties involved.  Although the settlement is complicated and will take years to work out, the basic framework will please some and annoy others. Here are some basic questions and answers about the settlement, which according [...]

The Financial Stability Board (FSB) was established to coordinate international efforts to promote effective regulation and supervision of the global financial system. In its latest report on global systemically important banks, the FSB makes it clear that the world’s largest banks have become too big to fail without crashing the global economy. The leaders of the G20 recently [...]

The “Too Big To Fail Banks” are at it again, making huge speculative bets on the odds of sovereign default by Portugal, Italy, Ireland, Greece and Spain.  The costly lessons of the derivatives debacle of 2008 have apparently been forgotten. In 2008, the Too Big To Fail banks bought massive amounts of credit default swaps (CDS) to protect themselves from loss on their [...]

Potential losses on Bank of America’s massive $75 trillion book of risky derivative contracts has just been dumped onto the FDIC by the Federal Reserve. Derivatives, once described by Warren Buffet as “financial weapons of mass destruction” are complex contracts entered into for speculation or to hedge risks linked to a wide variety of other (derivative) financial [...]

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 [...]

If you want to invest in bank stocks, legendary Warren Buffett says buy Wells Fargo. Wells Fargo, the fourth largest bank holding company in the United States with $1.22 trillion dollars in assets emerged from the financial crisis in far better shape than many of its large competitors.  The management team at Wells avoided high risk areas such as sub prime lending and focused on [...]

September 7, 2010 – The vast majority of banking industry assets are controlled by a small minority of large banking institutions.  As the number of banks has declined sharply over the past twenty years (see US Loses 7,300 Banks), banking assets have been concentrated into the hands of the banking giants.  Banks with more than $10 billion in assets control 78% of total [...]