Changing Landscape of Bank Stocks in 2010 – Yee Ong — Seeking Alpha

The fundamentals, dynamics, and structure of banks have changed dramatically after the financial crisis. �They are living on life support, will continue to lose their growth potential, and are no longer profitable investments.Banks today are like an indicted criminal whose fate lies in the government’s hands.� They have been found guilty of taking excessive risks and causing the near collapse of our country’s or even the world’s economy.� In the government’s eyes, they are as good as dead.� What keeps them alive are TARP money, stimulus programs, easy monetary policies from the Federal Reserve, and our government’s effort to make them appear healthier than they really are with accommodative accounting standards that mask certain losses. �But it is important that the Obama administration keeps this healthy banking system façade as he has used an exorbitant amount of taxpayers’ money to fund his rescue effort, and claiming victory is clearly a political necessity.� Now, he also has to walk a very fine line on this subject matter as a rosy picture of the bank will also anger the American taxpayers who are suffering at a time of a 24-year high unemployment rate of 10%, weak economy, and swelling budget deficits.� The recent loss of a Senate seat by the Democratic Party in Massachusetts has obviously caused Obama to rethink his political position, and the announcement of his plan to stem proprietary trading and hedge-fund investments at banks right after this politically significant event depicts the administration’s position to cap bank profits.We are in an environment where there are three stakeholders – the American taxpayers, the government, and the banks – and at most two winners can arise out of the current economy.� Since the ball is in the government’s hands and Obama needs taxpayers more than he does banks, the answer to the Wall Street or Washington question cannot be anymore obvious.�

via Changing Landscape of Bank Stocks in 2010 – Yee Ong — Seeking Alpha.

via Changing Landscape of Bank Stocks in 2010 – Yee Ong — Seeking Alpha.


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