Chrysler and Ford announced they are exiting the auto leasing business. Some are gloating that the automaker’s captive finance companies are finally getting their comeuppance — The End of the Auto Financing Scam and while we agree this may open opportunities for banks to re-enter a more rational marketplace, there are signs that the captives will simply shift their aggressive incentives to loans where risk is more contained. Chrysler has already indicated it will begin offering zero-percent financing for 72 months on more vehicles. Are there opportunities for banks? Yes, if they focus on 5 key strategies where they can make a difference.
More bank failures on the horizon? National City reported “We’re no IndyMac” as the bears circled.
Richard Bove, a well respected banking analyst, says there may not be many others at risk of failure. In the wake of IndyMac he reviewed the performance ratios of all banks with assets greater than $5 billion to assess the probability of failure. His conclusion: there are a few smaller banks that may be on the edge, but the only large bank at significant risk is WAMU.
Overall, the data “indicate that the system is not anywhere near the danger that existed in the late 1980s and early 1990s despite all the whining by public officials,” he wrote. “Perhaps the second-quarter numbers will prove them right.”
Bove has a great track record. But he also published a report on March 20 titled “The Financial Crisis is Over.” We hadn’t hit bottom then, and it sure doesn’t feel like we’re there yet.
For a readable review of his research note and comments on the Schumer/OTS pissing contest, see “Few other banks appear on brink“.
According to the Wall Street Journal, “Banking regulators are bracing for a slew of failures over the next year.” Undoubtedly that prediction will come true since bank failures have generally occurred when there have been systemic problems in the economy. With further declines in housing values and continued softening of the economy, this is as “systemic” as it gets. Continue reading
I’m not talking about sophisticated schemes, it’s this simple: an employee takes a $10,000 check made out to General Motors Corp., scrawls a handwritten endorsement “GM” on the back, and then deposits it directly into their personal checking account. Continue reading