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IBDvalueinvestin (99.64)

Hoping new strategy of shorting top gainers works.

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April 01, 2009 – Comments (3)

ISLE NS N/A$6.18
( +16.82%)N/AN/AN/A
SOA NS N/A$2.11
( +12.83%)N/AN/AN/A
ZZ NS N/A$2.68
( +80.20%)
N/A

LVS NS N/A$3.39
( +12.62%)

3 Comments – Post Your Own

#1) On April 01, 2009 at 1:59 PM, IBDvalueinvestin (99.64) wrote:

Dumb banks give back money, LOL. Now they will fail...

Four Small Banks Are the First to Pay Back TARP Funds by Eric Dash
Wednesday, April 1, 2009

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Four small banks became the first to return millions of dollars of emergency aid, and more may soon follow as the industry tries to escape what it considers the onerous conditions attached to the government’s money.

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Signature Bank of New York said on Tuesday that it had repaid $120 million to the Treasury Department. Old National Bancorp of Indiana returned $100 million, Iberiabank of Louisiana paid back $90 million, and Bank of Marin Bancorp of Novato, Calif., repaid $28 million. All of the banks paid 5 percent interest on the money they had received.

The four banks were the first to announce that they had returned money from the Troubled Asset Relief Fund, or TARP. The Treasury Department has set aside $250 billion to prop up the banking system, with about half of that money given to the eight biggest banks. About 500 small banks have received $73.7 billion.

But the purpose of the TARP money and the public perception of the fund have changed since then.

What was billed as a program intended to help healthy banks increase lending and swallow up troubled rivals widened to include a number of struggling banks. New restrictions on executive compensation and dividend payouts made such aid less palatable to bank managers.

“We don’t want to be touched by the stigma attached to firms that had taken money,” said Scott A. Shay, the chairman of Signature Bank. He said he also worried that the conditions on the aid could hurt the way he paid bankers and sales representatives.

Iberiabank executives said that tougher rules, including limiting dividends, made taking the aid untenable. “It really changed significantly from how it started,” said John R. Davis, a senior vice president at the bank. “All those changes made it very difficult for a bank like us to participate in the program.”

Originally, banks that accepted TARP money were required to raise private capital before they could repay the loan. But after Congress passed its economic stimulus bill in mid-February, the repayment policy was loosened as strict new compensation rules were put in place.

Banks could apply to their primary regulators for permission to return the TARP money to the Treasury Department early. The returned money could be used for other Treasury programs.

This week, the Treasury Department said that it would have about $134.5 billion of TARP money left, assuming what it said was a “conservative estimate” that $25 billion of the funds would be repaid. Industry groups, like the American Bankers Association, have lobbied aggressively to allow the banks to repay the money quickly, saying it would send a positive signal to depositors and investors that the nation’s banks were sound.

The announcements from the four banks indicate that all three major regulators — the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Insurance Deposit Corporation — are open to granting waivers.

Only banks deemed “well-capitalized” are expected to receive waivers. Regulators are still scrutinizing the balance sheets of the biggest banks as part of a comprehensive stress test to determine whether they need more capital. Regulators are unlikely to make such decisions until the test is complete.

Also unclear is the timetable for the country’s biggest banks to return TARP money. Top executives at Goldman Sachs, JPMorgan Chase, Wells Fargo and Bank of America have publicly said that they intend to repay it quickly.

President Obama did not provide specifics about the conditions that would allow banks to repay the loans quickly. At a meeting at the White House on Friday, at least two chief executives, Lloyd C. Blankfein of Goldman Sachs and Kenneth I. Chenault of American Express, asked the president to provide detailed guidance for returning the TARP money quickly.

Mr. Obama acknowledged that quick repayment could be a positive signal to the markets but expressed concern about undermining the administration’s efforts to bolster lending.

 

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#2) On April 01, 2009 at 2:36 PM, IBDvalueinvestin (99.64) wrote:

Hilerous that ZZ went up 100% on a measly .04 eps profit.

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#3) On April 01, 2009 at 2:39 PM, IBDvalueinvestin (99.64) wrote:

There is going to be many good chances this earnings season to short big gains like ZZ this earnings season. All you have to do is sit on the sidelines and watch the stocks soar on measly earnings but because the stocks are so low they soar on any positive earnings, no matter how small.

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