Word: banking
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...That could translate into a lot of money. In the past six months, the nation's largest banks have raised just over $225 billion using government guarantees, according to Thomson Reuters. Had the banks had to raise that money on their own it would have been much more expensive. Morgan Stanley, another bank that has reportedly been looking to pay back TARP funds, has raised $23 billion in FDIC-backed debt since the program began in November. Hintz estimates the government's help is allowing Morgan Stanley to lower its borrowing costs by 5½ percentage points. That would have...
...Banks exiting the TARP program are also looking to buy back the warrants they issued to the government in order to receive TARP funds. David Hendler, an analyst at CreditSights, estimates that it would cost JPMorgan nearly $2.6 billion to buy back their warrants from the government. "Banks may have to spend substantial sums to pay back their TARP warrants," says Hendler. Proponents of the banks paying back the government say the higher borrowing costs will only be temporary. As the market improves, banks will be able to issue bonds on their own at lower rates. Indeed, so-called bank...
...Still, the high costs of being TARP-free are causing some banks to say that for the time being they are better off with the government funding than without it. PNC Financial's chief executive Jim Rohr recently told Bloomberg that his bank, which got $7.6 billion in TARP funds, is planning on taking its time to repay the government. Doing anything else, he said, "would be punitive to shareholders...
...want to know whether the banking crisis is in the third inning or the ninth, consider Corus Bankshares. The Chicago regional bank has made just over $4 billion in commercial real estate loans. The recently completed government bank stress tests assumed that as many as 12% of all such loans could go bad in the next two years. So Corus is looking at a potential loss of $480 million. How much capital does Corus have to absorb those losses? Nothing. Nada. In fact, Corus is already is the hole for $9 million. Call the failure hotline...
...Bank analysts and industry watchers say the financial crisis, which has so far been mostly focused on the nation's largest banks, is entering a new phase. Around the country, dozens of banks are nearing insolvency or soon will be. On May 21, BankUnited, based in Coral Gables, Fla., became the 34th bank to fail this year. It is the largest bank bust in 2009. BankUnited had 85 branches and $8.6 billion in deposits. (See pictures of the dangers of printing money...