A headwind, not a show stopper
Posted on November 10, 2009 at 12:48 pmAtlanta Federal Reserve President Dennis Lockhart says commercial real estate’s slump will last as long as job creation limps along. But he doesn’t see the sector causing another downturn, though its struggles will affect small-business lending.
Unlike residential real estate, there is not the same direct linkage from CRE to household wealth - and therefore consumption - caused by erosion of home equity. However, there could be an impact resulting from small banks’ impaired ability to support the small business sector - a sector I expect will be critically important to job creation.
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No inflation worries here
Posted on at 7:23 am
Dirk van Dijk breaks down the components of interest-rate policy and says the Fed is best off sitting tight for a good bit longer.
While it is true that the implied inflation has been climbing since it almost hit zero last year, it is not at levels that suggest inflation is going to skyrocket. This means that the Fed should be far more concerned about getting the economy moving again. Any move to tighten up monetary policy by raising interest rates would be a serious mistake.
Also: If you read to the end of van Dijk’s piece, you’ll see some thoughts about the price of gold and the idea that — gasp — supply and demand, not a bunch a wily speculators, may actually be driving the commodity’s price.
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Fed orders West Tenn. bank to shape up
Posted on October 30, 2009 at 7:33 amRegulators from the St. Louis Federal Reserve Bank last week formally ordered the leadership of West Tennessee Bancshares to shape up its oversight and risk management and boost its capital. West Tennessee is the parent of the Bank of Bartlett, which has seven offices and about $450 million in assets but lost $3.1 million in the first half of this year.
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The point of new normal
Posted on September 17, 2009 at 1:47 pmThe Fed is apparently putting its magnifying glass to banks’ commercial real estate portfolios — you know, because if it finds problems now, it can fix them before they do real damage.
SEE ALSO: The fading prospects for financial regulatory reform
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Atlanta Fed president: Lost factory jobs likely won’t return
Posted on August 27, 2009 at 6:42 amThe recession’s painful toll on the U.S. industrial sector will be long-lasting, Atlanta Federal Reserve President Dennis Lockhart told the Chattanooga Chamber of Commerce Wednesday.
Lockhart said these ’structural adjustments’ in employment will likely weigh down GDP growth in the medium term. But he added that ’stabilization has taken hold, and the beginning stages of recovery are under way.’
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Bernanke news lifts banks
Posted on August 25, 2009 at 9:58 am
Local banks Pinnacle and Tennessee Commerce are up 3 percent this morning on President Obama’s announcement that he will nominate Ben Bernanke to serve another term as chairman of the Federal Reserve. Other banks with a big Middle Tennessee presence also are solidly in the green.
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Bankers clutch those purse strings tightly
Posted on August 17, 2009 at 5:18 pmSurveys published Monday by the Fed and the Treasury show that banks increased lending only to those with prime-mortgage-worthy borrowers during the spring.
Most banks said they expected their lending standards would be tighter than average until at least the second half of next year. For subprime companies and consumers, the majority of lenders said those standards will be stricter than normal for the foreseeable future.
SEE ALSO: The Fed and the Treasury’s announcement that they’ll extend the TALF liquidity program for commercial mortgage-backed securities through next June.
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Fed official tells Rotary we need more structure
Posted on July 20, 2009 at 3:22 pmAtlanta Federal Reserve President Dennis Lockhart told the Downtown Rotary today that economic growth is returning, but it won’t be gangbusters anytime soon.
The recovery will be weak compared with historic recoveries from recession. The recovery will be weak because the economy must make structural adjustments before the healthiest possible rate of growth can be achieved.
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AIG to spin off two more units
Posted on June 25, 2009 at 8:21 am
The government is trading part of the debt extended to American International Group last fall for preferred equity in two of the insurer’s subsidiaries. AIG plans to take American International Assurance Co. and American Life Insurance Co. public and raise more capital after that. There’s still no word on the future of AIG’s American General division, which employs hundreds in Brentwood.
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Looking ahead to higher rates
Posted on June 23, 2009 at 10:31 pmStreetInsider.com relays the essence of a Deutsche Bank report that analyzes the potential impact of higher interest rates on a number of the country’s largest banks. Among banks with a good-sized Nashville footprint, Regions Financial (Ticker: RF) comes out of the mix favorably.
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Dissecting the stress tests
Posted on May 7, 2009 at 10:14 pm
First, all the banks’ results neatly in a row. Among the banks with a notable presence in Nashville, only U.S. Bank and BB&T were deemed not to need new capital. BofA, Wells Fargo, Regions, SunTrust and Fifth Third must raise a combined $53 billion.
Then, from the AP comes a rundown of just how some of the affected players plan to raise the billions they need as well as word from those planning to repay TARP ASAP.
And via the Journal, a measured look at how the once-maligned concept of stress tests – Wells chief Dick Kovacevich not long ago called them ‘asinine’ – may actually come to be seen as the positive tipping point when we collectively caught our breath.
Investors fretted for weeks that the Treasury wanted to nationalize parts of the banking system, despite repeated efforts by Mr. Geithner and others to dispel that idea.
In retrospect, the tests were akin to hitting the pause button. The period allowed Mr. Geithner to buy time for the government’s evolving approach to the banking crisis, which had previously been ad hoc and heavily criticized.
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Six becomes 10 in stress tests
Posted on May 5, 2009 at 10:55 pmSo says the Journal:
It’s possible Wall Street is being overly optimistic about the impact of the results and the resulting dash by banks to bolster capital. One big risk worrying industry officials is that the market will view banks on the list as insolvent when the official results are announced Thursday, even though Fed officials have repeatedly said that’s not the case.
SEE ALSO: BofA may need 34 really big ones and Are Regions and SunTrust part of The Stress Test Six?
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BofA, Citi scramble for Capital Plan B
Posted on May 3, 2009 at 10:59 pmSources have told the FT that early indications from the Fed’s stress tests are that both banking behemoths will need at least $10 billion in new capital.
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Are Regions and SunTrust part of The Stress Test Six?
Posted on April 29, 2009 at 7:50 amSources tell Bloomberg that six of the 19 banks that underwent the Federal Reserve’s stress tests will need more capital to cushion themselves against loan losses. Analysts at Morgan Stanley said late last week that Regions and SunTrust, the parent companies of Nashville’s No. 1 and 3 banks, are likely to be among them.
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No new credit from the banks
Posted on April 13, 2009 at 12:55 pmNew figures from the Fed show that U.S. banks’ commercial loan portfolios shrank 2.9 percent during the first quarter. Commercial real estate exposure – seen by many as the next domino to fall – fell by 0.5 percent.
For a glass-half-full take on these numbers, check out hedge fund manager Gary Townsend’s opinion that “banks are not only able to lend, but that they’re taking ample market share from non-bank financiers and the shadow banking system.” For the glass-almost-empty approach, read the first few comments to Townsend’s piece.
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