Upside Down Mortgage

Subprime Losses Banks

Question: Only 3 of the 54 banks that refused TARP funds posted a loss over last 4 quarters? Why were others rewarded?

http://money.cnn.com/2009/09/11/markets/thebuzz/?postversion=2009091112

"Consider this: Shares of the 54 banks that didn't want a bailout are, on average, down just 16% since last September. That's compared to a 30% drop for the KBW Bank Index and 36% plunge for the S&P Regional Bank Index.

And why did these TARP-shunning banks hold up better than their peers? They didn't get involved in as much risky subprime lending as other banks. In fact, only three of these 54 banks reported a loss over the past four quarters.

What's more, the banks that just said no are, on average, expected to report a 17% increase in profits this year. And the average dividend yield for the group is an impressive 3.3% -- a testament to the fact that many of these banks were not forced to slash their dividends to preserve capital."

Thoughts?

Answer: Nice information

Hmmm--do you think O.B. might have a gambling problem? He likes to put our money on long shots which rarely pay off. Seems to be a pattern there.

"They didn't get involved in as much risky subprime lending as other banks"--- Seems some lenders know it's good business to consider a past record and future prospects.

Banks Face More CDO Writedowns

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