Bad news in banking was the real story in the same day at the markets surge on positive economic data. Federal Reserve new capital requirements, totally defunct Congress leaving for recess with no extension of the payroll tax cut or unemployment benefits, and the IMF warning on world economy were a combination of news stories via the Drudge Report with major impact for the banking industry. The surge in stocks were followed by Monday’s routing of bank stocks due to uncertainty in Europe.
The commonality of all these issues for the banks is uncertainty. The new capital requirements will place additional strain on Bank of America. The bank has taken a beating in stock price, foreclosure practices, and consumer satisfaction to question the viability of the bank to survive the ongoing challenges. Second, a tax increase and unemployment benefits ending for many Americans in lieu of a deadweight Congress will be a tipping point for consumers who were able to keep up payments on obligations to default. This new variable will impact the industry, but the impact will not be quantifiable until mid 2012. Third, the IMF warning on the dangers to the world economy as Europe’s issues are America’s issues. The uncertainty in Europe will continue to be a negative factor on stocks especially for the banking industry.
As consumers, the banking uncertainty is important as events could impact your respective banking institution. A bank collapse or failure could happen without warning or notification. The best advice for consumers is to access Bankrate.com for a free ratings system on banks and credit unions, FDIC Troubled Bank List, and Google News or Google Finance for up to the minute news and market information on your banking institution. Please feel free to contact email@example.com if assistance is needed to find information about your banking or credit union institution.
- IMF Warns China To Act Quickly To Avoid Real Estate, Other Asset Bubbles (huffingtonpost.com)
- Latest IMF Bailout Fund Falls €50bn Short of Target after UK Refuses to Contribute (the2012scenario.com)
- Osborne presses on with bank ring-fencing plan (independent.co.uk)
- Bank of America Risks Capital Shortfall: Creditsights (thestreet.com)
- Fed issues draft Dodd-Frank big bank rules (marketwatch.com)
- The problems with the ECB-IMF switcheroo (ftalphaville.ft.com)
- Fed Rules For Bank Oversight Expected This Week (huffingtonpost.com)