This Day On The Street
Continue to site right-arrow
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Latest Look at Big Banks Reveals Split

NEW YORK ( TheStreet) -- The Dubai debacle has prompted investors, once again, to consider the state of the credit crisis and global banks.

Dubai's state-controlled holding company last week sought a standstill agreement with creditors and an extension of loan maturities until at least May 30, the latest credit bubble to burst more than a year after Lehman Brothers died and AIG (AIG - Get Report) was put on life support.

Still, three of the four biggest U.S. banks -- Bank of America (BAC - Get Report), JPMorgan Chase (JPM - Get Report), Citigroup (C - Get Report) and Wells Fargo (WFC - Get Report) -- are excellent choices for long-term investors. The following is a breakdown of each of the four banks, and their prospects as investments.

Bank of America

Not only is Bank of America going through a humiliating search for a replacement for Chief Executive Officer Ken Lewis, one of the candidates, internal senior executive Brian Moynihan, laid an egg during the Congressional Oversight Committee hearing on Nov. 17.

Saying he didn't know for sure why former general counsel Timothy Mayopoulos was fired last December, Moynihan put forth that he believed it was part of the company's "downsizing." Members of the committee later said the testimony was hard to believe, since the dismissal came after Mayopoulos said Bank of America couldn't justify backing out of its deal to acquire Merrill Lynch, and Moynihan was the initial replacement as general counsel and reported directly to Lewis.

The CEO search, along with the heightened scrutiny that goes along with a $45 billion government stake in the company, has put a drag on Bank of America's shares, which have fallen about 17% since mid-October. But there are bright spots for investors willing to hold the stock for several years. For one, the price-to-tangible-book ratio is 1.4, down from 2.8 at the end of 2007 and 3.5 in both 2006 and 2005, according to SNL Financial.

During periods of "normal" economic growth, the four largest banks have tended to trade for at least two times tangible book value, but often much higher. Over the next several years, the Merrill Lynch acquisition should pay off, with the unit boosting revenue in Bank of America's Global Banking, Markets and Wealth & Investment Management segments.

1 of 5

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AIG $55.38 0.00%
BAC $15.84 0.00%
C $53.67 0.00%
JPM $62.13 0.00%
WFC $54.82 0.00%


DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs