Bleeding the banks to death
With endless lawsuits, it's tough to forecast anything, let alone earnings.
I had to laugh this morning when the "shocking" news came out that Deutsche Bank withdrew its profit forecast because of the uncertain times we are in.
Profit forecast? How quaint. How sweet that they even had one.
In truth, isn't that what really ails the banks right now, both in the U.S. and in Europe? Over there, the sovereign debt holdings are humongous. And why shouldn't they be? What was the safest paper to be in?
Over here, we know the holdings are better. But where is the earnings power? What is the earnings power, for example, of Bank of America (BAC)? What is it? Does it have any? Does the government or governments want them to be in business? And what the heck is with that Countrywide preferred stock that is blowing out? Will they Chapter 11 it? Can they?
We can't get our arms around these banks, because they either have to deal with the yield curve from hell, like the regionals, or they have so many legal bills and exposure to so many lawsuits from faulty mortgages issued that it is impossible to fathom what the real earnings will be.
That's why it is so difficult to try to call a bottom in this group. There is no coordinated attempt by any part of the federal government to solve these lawsuits. Why bother? They couldn't put any of the bankers in jail. So why not just bleed them to death?
So it's one more day in the great unwinding of the big move post-TARP three years ago, where the group is settling down to brain-dead levels and the lawsuits never end. Between Morgan Stanley (MS) and whatever the heck the worries are now -- total whack-a-mole there -- and Bank of America, we've got forecasts and actual earnings that mean nothing. And remember, both are solvent and earning money.
I keep thinking, though: I were an international hedge fund and I couldn't bet against European banks, why not short American banks? It isn't like you are betting against Canadian banks with a good yield and decent growth. You have almost no yield, and the biggest line items are fines and attorney fees that seem unable to be capped.
At the time of publication, Cramer was long Bank of America.
As I stated before, it is the banks fault why they are in this mess to begin with. They, as many large corporations (and the US Government) do not know how to operate within a budget!
Diversification and bad loans...and GREED!!!
..And what the heck is up with BoA paying 4.4 BILLION dollars in bonuses in 2010 when their company was sinking under mountains of expensive litigation, bad mortages, countrywide, and everything else?
What were they thinking?
Oh, yeah. Like the typical Republican Rich do. Soak the middle class to pay for our greed. (that's why BOA is targeting the lower/middle class with this $5 Debit Card fee that does not apply to their PREMIUM account holders)
And they have good ol' Jim Cramer as their cheerleader trying to look intelligent, but is an excellent representation of that rich mentality.
Bleeding the banks to death?????????????????
Someone came up with the idea of leveraging OUR DEPOSITS, NOT THIER MONEY to the tune of 40 or 50x and it wasn't the people that made it possible for those banks to still actually be in business .................not to mention the seemingly neverending bull shlt of being told that these nimrods are the "best and the brightest" as some cockeyed justification of thier 5 lifetimes worth of income in yearly bonuses are supposed to be acceptable to the corporate stockholders!
Let them eat cake (cow pies)!
Those law suits he's whining about include the one that will end up costing him millions. Overstock has already won similar cases. This one begins in December.
Oh yeah, btw. Those law suits against the banks are very much deserved. They brought it upon themselves and no, BofA is not solvent. It's simply hiding it's bad debt as long as it can until it has no other choice but to do a massive write-down and it's coming soon.
I think it says a lot about the mindset that MSNBC would continue allowing a soon to be convicted criminal to write for its website.
The bandit bankers deserve all these lawsuits!!! If they weren't so greedy and treated people fairly maybe they wouldn't have these problems. NO sympathy from me.
The article ends with : At the time of publication, Cramer was long Bank of America.
Long ? When hell freezes over Cramer might be able to dump his BoA stock only after raving about how great they are during one or two of his shows. Long indeed.
Jimmy Cramer speaks/writes for the greedy. What a surprise! Who writes for the hard working people??? I guess there's no money in it?
Many poor... few rich...
"There is no coordinated attempt by any part of the federal government to solve these lawsuits. Why bother? They couldn't put any of the bankers in jail. So why not just bleed them to death?"
Surely you aren't suggesting that people that were fraudulently persuaded to setup usurious mortgages, or entities that were fraudulently sold these toxic assets forego their right to litigate?
Furthermore, it wasn't so much a matter "couldn't put them in jail" but wouldn't so much as file charges.
Isn't this the almighty free market at work? Banks behaved poorly and now the market is making them suffer for it. Why should the government step in to save them from pain yet again?
All these people suckling at the teet of the financial institutions don't get to have it both ways. They can't cry "foul" when the government won't intercede on their behalf but the tell them "hands off" when they attempt to place even modest regulation on increasingly exotic (read: dangerous) profit seeking vehicles.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
These hot movers could rise by double digits in coming months.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.