How big are bank problems in the USA?

Bloomberg cites Joseph Stiglitz, who has evaluated bank problems as bigger than pre-Lehman. This is a questionable statement because it is based on a qualitative evaluation. Our stock price model allows to evaluate the difference between 2008 and 2009 in a quantitative format - adjusted share price.

First, we show some examples of poor banks which have approached the level of bankraptcy:

1. Citigroup (C) reached the bottom in the beginning of 2009. Was bailed out. On an upward trend right now - no problems in the near future, as the model says. I consider the possibility to invest right now.
(N.B. here and below we do not provide actual empirical relationships behind the predicted curves because they are confidential.)

2. Colonial Bank (CNB) reached the bottom in March 2009. Is a part of BBT now. Why isn't it bailed out?

3. CIT Group Inc. Must fail in April, but was bailed out.

4. E*TRADE financial corporation (ETFC) definitely has problems in 2009. Our model is highly unceratain because of the uncertainty in underlying data. ETFC will likely have a problem by the end of 2009, but then will recover quickly.

5. SLM Corp. (SLM) seems to have hard time in the near future. This is the only problem bank we have found among those in S&P 500. Will watch its evolution

Several positive examples of large importance:

6. Fifth Third Bancorp (FITB) approached the zero line in the beginning of 2009. has been successfully recovering since. Demonstrates sustainable growth, but still its share price is at the level of October 2008. I wonder that Stiglitz confused the down- and upgoing branches. It is worth noting that S&P 500 banks are chiefly on rise with large positive trends.

7. Bank of America dropped very low but recovered fast. The model predicts relatively quick growth.

8. Goldman Sachs has only slight problems compared to those associated with CIT and CNB. Currently is closing its 2007 level. No problems are foreseen.

9. JPMorgan Chase is very similar to GS. Stays good for investment.

Stiglitz and Co. look to be mistaken about problems in 2009. It might be another decline in the second part of 2010, however.

No comments:

Post a Comment