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 […]

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 […]

Banks Are A Financial Disaster For Both Shareholders And Depositors

In days gone by, shareholders of large banks viewed their investments as a source of income via dividends and potential capital gains via share appreciation.  In days gone by, depositors viewed banks as the safest place to harbor their hard earned dollars while earning a respectable amount of interest income. That was then, this is […]

Ridiculous Divergence Between Bank CEO Pay And Shareholder Returns

The wide divergence between bank CEO compensation and shareholder returns is an embarrassment to the capitalist notion of linkage between performance and pay. Shareholders of banking stocks have seen the value of their investments pulverized over the past four years as the banking industry struggles to recover from the lending excesses of previous years.  Shareholders […]

Credit Ratings of 15 Global Banks Cut In Largest Downgrades Since 2007

In the most sweeping credit downgrades since 2007, Moody’s Investor Service lowered the credit ratings of fifteen global banks, including the five largest banks in the United States.  The scope of the credit downgrades left many wondering if we are entering a new phase of the global financial meltdown that started in 2008.  Despite trillions […]

Bank of America Executives Win, Shareholders Lose – It’s Not Supposed To Work This Way

Most shareholders understand that an investment in a public company entails risk – that’s what capitalism is all about.  Well managed companies with great products generally wind up enriching shareholders over time and no one begrudges the fact that executives of a successful enterprise are well paid. What a lot of shareholders don’t understand, however, […]

Bank Stress Tests Viewed As Fed Deception By Critics

Every banker knows that public confidence in the banking industry is essential. With the banking industry approaching a near meltdown last year, the Federal Reserve decided to conduct a series of “stress tests” on the country’s largest banks in order to restore confidence in the banking system.  After reviewing the results of the stress tests, […]