Beware of a New Banking Bubble

[Pryderi]

https://www.linkedin.com/today/post/article/20130307190433-33551920-beware-of-a-new-banking-bubble?ref=email&_mSplash=1&rs=false

“There are more people in the marketplace and they’re not acting entirely rational, so we all have to end up being more competitive and that means we have to sacrifice margin,” US Bank (USB) Chief Executive Richard Davis said earlier this week of the loan market.

Froth is bubbling up in bank M&A too. Three recent deals involved premiums of 32% to 83% above tangible book value, implying that buyers are willing to bet on the prospect that the targets will be worth more in the future than they are today. "We are seeing in-market [banks buying banks] deals with big expectations around cost savings,” Phil Weaver, a partner at PricewaterhouseCoopers told American Banker recently.

Cost-savings is another term for “synergy,” the buzz-word that over the years has impoverished shareholders and enriched investment bankers in roughly equal measure

[hobbit709]

1. Rule #1 If a banker is for it, we're gonna get screwed.

[Jackpine Radical]

2. There's only one answer: Deregulate the banks NOW!

By the way--what was the question?

[RKP5637]

4. Oh, I know, I know: "How can we screw everyone again and get another bailout

and CHEAP money?"

[RKP5637]

3. Recall decades ago ... "If you can't trust your bank, who can you trust." Now

it's "Never trust a bank!"