Warren Buffett“A public opinion poll is no substitute for thought.”
Adlin Sinclair“Success is a welcomed gift for the uninhibited mind.”
Big bank shares hammered after Obama proposal (AP)
plummeting Thursday.
, Obama vowed to fight big banks with tougher regulations that he believes would head off the cascading failures that required billions in bailout funds for
.
He wants new rules that would restrict banks in the use of depositor money and also limit how big financial institutions can become.
“The market certainly perceives this can only have a negative impact on big bank profits,” said Hal Reichwald, co-chair of the banking and specialty finance practice group at the law firm Manatt, Phelps & Phillips LLP.
would lose the tools that have helped offset huge loan losses over the past year, but they are also some of the same tools that got them into trouble in the first place.
“The devil is in the details,” said
, a
of Washington research at Keefe, Bruyette & Woods Inc. If the legislation just restricts trading by the big banks and doesn’t outright ban it, the exact effect will depend on the limits put in place, he said.
, which don’t have big trading desks, actually strengthened on the news. They could become more competitive with their larger counterparts.
An exchange-traded fund that tracks financial stocks in the Standard & Poor’s 500 index fell 1.9 percent. The
, which tracks 24 regional and national banks rose 1 percent.
Big banks under new rules may have a limited ability to court new customers aggressively because they would not be able cover better pricing on the retail side with as much revenue from trading, said Bill Hampel,
.
shares fell 17 cents, or 4.9 percent, o $3.29.
declined 97 cents, or 5.9 percent, to $15.52, Shares of
dropped $2.77, or 6.4 percent, to $40.63.
— the traditional business of collecting deposits and issuing loans — would face problems in 2010 due to uncertainty over the economic recovery and high unemployment.
But there is little sympathy in the public right now for big banks.
. said it earned $13.4 billion in 2009 and rewarded employees with $16.2 billion in salaries and bonuses. The profit was due largely to
, which is where banks trade their own money.
Goldman shares lost 3.2 percent, falling $5.28 to $162.51, despite sharply higher fourth-quarter profits the bank reported Thursday.