Too-Big-To-Fail Banks: 3 Buys And 1 To Avoid
filed in Daily Buzz News on Nov.30, 2011
By Robert Marc Gordon
In early November 2011, the Financial Standard Board identified 29 banks worldwide as being “too big to fail”. Of those, eight are based in the United States. Of those eight, two, Morgan Stanley (MS) and The Goldman Sachs Group Inc. (GS), are actually investment banks that changed their status to commercial banks in the wake of the banking crisis in 2008.
The most important features of the FSB’s designation are marginally higher capital requirements for the named banks by the end of 2012, and a plan on an orderly liquidation should some sort of financial Armageddon occur to any of the institutions. I will focus on the four largest of these banks, usually referred to as “money center” banks, looking in particular at their returns on assets and equities, capital levels and future prospects. My work concludes that Wells Fargo (WFC), Citigroup (C), and JPMorgan Chase