This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Future Financial Winners and Losers

Editor's note: This is the second of Scott Rothbort's two-part look at the future of the financial services sector.

Mortages: The Return of the S&Ls

The era of mortgages gone wild is over. The days of Countrywide (now owned by Bank of America (BAC - Get Report)) and Thornburg Mortgage (now traded over-the-counter) are behind us. When the real estate market returns to "normal," gone will be the standalone mortgage companies, which rely on credit default swaps or unsecured borrowing to fund their origination businesses.

When the dust settles from the current financial shakeout, mortgages will probably be sourced in a much more traditional way -- from deposits. This is going to benefit the smaller and localized savings and loan industry, which was destroyed by the S&L crisis of the late 1980s and crushed by the once mighty Wall Street asset-backed security machine.

Local S&Ls will also benefit from an increase in local deposits, as depositors become more leery of the large money center banks, such as Citigroup (C - Get Report), JP Morgan Chase (JPM - Get Report) and Bank of America.

The five largest S&Ls by market cap are: People's United (PBCT - Get Report), Hudson City Bancorp (HCBK), New York Community Bancorp (NYB), Capitol Federal (CFFN - Get Report) and First Niagara (FNFG). I would note that all but First Niagara have spurned the government's TARP (Troubled Asset Relief Program).

(Don't miss: " Opinion: A Plan to Resolve the Banking Crisis")

Wondering what will happen with Fannie and Freddie? Fannie Mae (FNM) and Freddie Mac (FRE) will most likely have shackles put on their activities, in essence, forcing these GSEs (government-sponsored entities) back to lending according to their original mandates.

Additionally, Fannie and Freddie will fund and execute the Obama administration's foreclosure prevention plan. They will contribute more than $20 billion to the $75 billion loan modification program, which was unveiled last week. The funds will be used mainly to subsidize interest rates so troubled borrowers' monthly payments can be lowered to affordable levels.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
HCBK $0.00 0.00%
BAC $14.77 1.44%
C $46.68 0.86%
CFFN $13.40 0.83%
JPM $63.79 0.93%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs