All You Need to Know About Financials

From Credit Cards: Safe Haven in the Storm?:

In this third installment, Craig Maurer, an equity research analyst covering specialty finance and payment processing companies at Calyon Securities, weighs in on the big credit card processing firms.

TheStreet.com: As the housing/credit crisis morphs into a full-on economic slowdown, consumer spending is a big concern among Wall Street observers, economists and analysts. How will a slowdown in consumer spending affect the card companies?

Maurer: A continued economic slowdown's most pronounced impact on the card companies (the issuers not the networks) would come via two avenues: growing unemployment and tightening credit standards. The problems posed by unemployment on a cardholder's ability to repay his credit card debt should be self-explanatory. Tightening credit standards, which are a direct result of pressures both economic and structural, hurt a consumer's ability to refinance at more advantageous rates, diminishing their ability to keep up with payments. While not necessarily an impact directly related to the slowing economy, rising commodity prices will obviously impact the consumer's availability of free funds to pay down debt.

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From Trust Banks: Steady in Crunch Time:

In this final installment in the series, Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, discusses how the credit crisis has affected trust and processing banks.

TheStreet.com: Goldman Sachs recently said that it expects the banking sector to raise an additional $65 billion before the credit crisis peaks next year, but notes trust banks like Bank of New York Mellon (BK) and State Street are buys. Are trust banks better choices for investors during this market downturn? How are these businesses relatively safe from the credit crisis?

Cassidy: The basic long-term business for the trust banks -- Northern Trust (NTRS) , Bank of New York Mellon and State Street -- are some of the best businesses a financial institution can be in today, [because they primarily bring in recurring fee-generated revenue from businesses like] asset servicing for institutional customers, asset management, wealth management, securities lending and foreign exchange trading.

In the commercial banking system, companies that have exposure to the highest risk loan areas, which today are construction loans, commercial mortgages and leveraged loans, are witnessing a dramatic increase in credit problems. The trust banks do not have any meaningful exposure in those three areas, which is one of the reasons they have been identified as great hide-out names during this economic or credit crisis.

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How to Catch the Bottom in Financials (Video, Jul. 6)

RealMoney contributor Dan Fitzpatrick says smart traders have to wait it out. Finding the bottom is a process, not an event.

To watch the video, click the player below:

To stay up to date on the financial sector, don't miss TheStreet.com's Banks section and Financial Services section.

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