Sell Banks Stocks or Buy Bank Stocks
Ok, here it comes. After the government released the results of its stress tests, banks are scrambling to come up with ways to raise huge amounts. It seems that the government money that was a much vaunted and absolutely necessary lifeline to banks has become tainted now that it comes with, horror of horror, strings on how the money can be spent. As if the banks ever handed out a huge loan to anyone without some sort of control on the collateral. Be that as it may, banks want out of TARP and they want out now. Even banks that would be much better off holding on to their TARP dollars are looking to buy back the government shares of preferred stock that they had to put up in order to their money. Seems there is a feeling that the banks that do keep their TARP funds will be viewed as sickly or less stable than their counterparts who repay, regardless of the cost or wisdom of doing so. The only way for these banks to raise the kinds of dollars being thrown around is by selling off assets, which is fine if they are not part of the core …