All You Need to Know About Financials

How much do you know about the financial sector? From Bank of America and Merrill Lynch to Wachovia and Wells Fargo, go beyond the headlines with TheStreet.com.
Author:
Publish date:

Updated from July 29.

How much do you really know about the latest financial sector news?

The following are key insights from

TheStreet.com

.

From

Visa Credits Debit Cards for Earnings Beat

:

Visa

(V) - Get Report

posted better-than-expected third-quarter earnings in its first full quarter as a public company, fueled by strong growth in its international credit and debit card businesses.

The San Francisco-based firm made $422 million, or 51 cents a share, compared with a pro forma profit of $299 million in the year-earlier period. Visa had its initial public offering in March. Prior to that the company was not required to report earnings according to

GAAP

rules.

"The company's strong financial performance and double-digit increases in payments volume and transactions in this current economic environment are further proof of the resiliency of our network business model,"

CEO Joe Saunders continued.

Read the full article.

From

MasterCard, Visa Test Limits

:

Investors in

MasterCard

(MA) - Get Report

and Visa will be listening to hear how the firms characterize the depth of the downturn in the U.S. and will be on the watch for any forward-looking comments on their businesses, observers say.

"This is the quarter when the resiliency of MasterCard's business model will be tested, as the various data points we monitor all tracked somewhat weaker/slower in the quarter," writes Howard Shapiro, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, in a research note where he trimmed his quarterly earnings estimates on the firm. "These include weak retail sales in the U.S. and slower growth in revolving debt, anecdotal signs of slowing volume growth internationally and a flat dollar versus major currencies."

Read the full article.

From

Citi Faces $8B More in Writedowns: Analyst

:

Deutsche Bank analyst Mike Mayo predicts that

Citi

(C) - Get Report

will take third-quarter writedowns of roughly $8 billion on its collateralized debt obligations, according to a note published early Tuesday

Jul. 29. He also says that Citi may have to raise capital sooner rather than later as a result of the writedowns.

Citi still has $22.5 billion of net CDO exposure as of the end of June. It "could have another $7 billion of writedowns," Mayo writes. "In addition, we estimate a $1 billion loss on its remaining $2 billion exposure with monoline insurers."

Mayo cut his estimates by $1, and now predicts Citi to post a third-quarter loss of 59 cents a share. For the full year, Mayo expects Citi to post a loss of 80 cents a share.

Read the full article.

From

Merrill to Raise Capital, Sell CDOs

:

The brokerage firm

Merrill Lynch

(MER)

said after the close of trading Monday

Jul. 28 that it will sell $30.6 billion of U.S. super senior ABS collateralized-debt obligations to an affiliate of Lone Star Funds for $6.7 billion. At the end of the second quarter, the CDOs were carried at $11.1 billion, and in connection with the sale, Merrill will record a pretax writedown of $4.4 billion in the third quarter.

All told, the move will cut Merrill's domestic super senior ABS CDO long exposures from $19.9 billion on June 27 to $8.8 billion.

The company also agreed to terminate its ABS CDO hedges with a unit of

XL Capital

(XL)

and expects to discuss settling additional hedges with other monoline counterparties.

Aside from the CDO sale, Merrill said it would offer new stock to the public in an effort to raise $8.5 billion.

Read the full article.

Plus, don't miss this related Merrill Lynch story:

Merrill Sheds Profits, Bloomberg

(Jul. 18: Merrill Lynch reported a loss of $4.7 billion, or $4.97 per share... It is the firm's fourth consecutive quarterly loss... Merrill posted $9.4 billion in writedowns and impairment charges, with negative net revenue of $2.1 billion. That figure compares with a positive $9.5 billion a year earlier.)

From

Merrill's Debt Deal Not So Cut and Dry

:

Merrill is still open to tons of risk.

The company really only took out 25% of $6.7 billion, or $1.675 billion of risk, off the balance sheet.

Read the full article.

Cramer: What Merrill and Lone Star Aren't Telling You (Video, Jul. 30)

Jim Cramer has the real story about the inner workings of the latest banking deal.

To watch the video, click the player below:

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Plus, don't miss

Cramer: Merrill, Sell the Whole Thing

(Jul. 29) on

TheStreet.com TV.

From

Rally in Bank Stocks Doesn't Add Up

:

Financial reports for many banks in the second quarter have looked remarkably consistent: sliding profits, mounting loan losses and soaring stocks.

Approximately 56% of the 39 financial companies in the

S&P 500

that have posted results so far have beat earnings estimates, according to Thomson Reuters. Since the beginning of last week

Jul. 14-18, the

Keefe Bruyette & Woods Bank Index

, which tracks the top 100 banks, is up 35%.

Even some banks that posted larger-than-expected losses, such as

Wachovia

(WB) - Get Report

, saw shares rise after it pointed out that a further public capital raise is so far unnecessary.

Still some analysts say that the rally will be short-lived as it had more to do with short-coverings

"

All You Need to Know About Short-Selling

" than it had to do with investors buying bank stocks because of improved fundamentals in the group.

Banks are still slogging through declining credit trends, particularly as the pain surges past hard-hit subprime mortgages into other areas like home equity and certain prime loans, such as the popular option adjustable-rate mortgage. As home prices continue to decline -- significantly in some areas -- loss estimates are also likely to be higher than initially thought. The pain could extend into 2010, crimping bank earnings for quarters, if not years, to come, many say.

Read the full article.

From

Wachovia Shares Plunge on Credit Hits

:

Wachovia shares were plunging more than 10% Tuesday morning

Jul. 22 after the troubled bank posted a nearly $10 billion second-quarter loss, slashed its dividend and cut jobs.

"These bottom-line results are disappointing and unacceptable," said Wachovia Chairman Lanty Smith. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility. Our company is facing up to these issues, is addressing the challenges head-on and has redirected near-term strategic priorities."

To preserve capital, Wachovia plans to reduce its headcount by 6,350 employees, or roughly 5% of its workforce. The bank said it has already reduced its mortgage employee headcount by 2,000 through June, and plans to cut 4,400 employees in its mortgage segment over the next year, according to presentation slides Wachovia once again reduced its dividend by 86% to 5 cents a share, which will conserve roughly $700 million of capital each quarter. It also has decided to exit the wholesale mortgage origination channel, it said Tuesday.

"In the short term, the entire organization is focused on protecting, preserving and generating capital, reinforcing Wachovia's strong liquidity position, and reducing risk," CEO Robert Steel said in his first public comments as head of Wachovia.

Read the full article.

Plus, don't miss this related story:

Wachovia Falls on Downgrade, CFO Exit

(Jul. 25).

From

BofA Hires Goldman Investment Banker

:

Bank of America

(BAC) - Get Report

continues hiring in and lending aggressively out of its investment banking unit, taking advantage of cautiousness on the part of its competitors to gain market share and snap up some talented executives.

Sources say BofA's latest hire is Chris Hogg, a longtime

Goldman Sachs

(GS) - Get Report

executive who was in charge of the Wall Street firm's unit that helps its financial institutions clients raise money.

Though BofA CEO Ken Lewis said last year that he had "had all the fun

he could stand in investment banking," he has lately been making more positive statements about that business, which accounted for $9.1 billion, or 24%, of the bank's $37.3 billion in second quarter revenues.

Read the full article.

Plus, don't miss

BofA Approves $3.75 Billion Buyback

(Jul. 23) and

Cramer: Housing Bill Will Revive BofA

(Jul. 30) on

TheStreet.com TV.

From

Cramer: JP Morgan Can Save Banks

(Video, Jul. 22):

Cramer:

"I think the central quandary that this market is saying is, 'How can the banks go up again?' And the answer is... the deposit bases of these banks are huge and they are generating real revenue growth. Now, Wachovia took a lot of actions this morning that were very dire... but the deposit base is showing that there's money to be made. We saw that with

Citigroup

(C) - Get Report

. Particularly saw that with

JPMorgan

(JPM) - Get Report

. I think that you can say we definitely saw that with

Bank of America

(BAC) - Get Report

. We saw that with

USB

U.S. Bancorp

(USB) - Get Report

, which is my favorite... It is very clear that there will be other banks for sale. If you can break banks into good banks and bad banks... the good banks will be purchased by JPMorgan or USB or

Wells Fargo

(WFC) - Get Report

."

To watch the video, click the player below:

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Plus, don't miss this related "Wall Street Confidential" video:

Cramer: Nice Work, Bank of America

(Jul. 21).

From

BofA Profit Slides, But Beats Expectations

:

Bank of America shares surged

Jul. 21 as much as 12% after the Charlotte, N.C., bank beat Wall Street's expectations for second-quarter earnings, despite a 41% decline in profits from a year earlier.

The bank recorded profit of $3.41 billion, or 72 cents a share, in the three months ending June 30. That compares to $5.76 billion or $1.28 a share, a year earlier, but up from $1.2 billion or 23 cents in the first quarter. Revenue rose slightly to $20.3 billion.

BofA's second-quarter profit including a pre-tax merger restructuring costs of $212 million. BofA closed its purchase of

Countrywide Financial

on July 1.

It now expects the Countrywide deal to be accretive this year, where previously it had said the deal would be neutral to earnings in 2008.

Read the full article.

From

Citi's Pandit Consolidating Power

:

The departure of Citigroup Michael Klein is the latest piece of evidence CEO Vikram Pandit is consolidating power at the troubled bank.

Klein, a 23-year veteran of the bank and one of its highest-paid executives, will leave the bank "to pursue other opportunities," Citi said in a statement Monday

Jul. 21. Pandit stripped Klein of his management responsibilities after he became CEO, though he was complimentary of the departing executive in the bank's official statement.

Klein's departure hardly comes as a surprise. His role at Citi had become increasingly vague during Pandit's tenure. He had been in charge, directly or indirectly, of nearly all of Citigroup's client relationships, prior to a reorganization in March. Pandit redefined that job, essentially giving Klein's duties to John Havens, one of his top deputies. Havens is CEO of the institutional clients group, which was Pandit's job before he took Citi's top job.

Klein was among the contenders for Citi's CEO post after the resignation of Charles Prince last year, according to reports in

The Wall Street Journal

-- although others believed the 44-year-old was too young to be considered for such a lofty position. Still, his presence may have posed a potential problem for Pandit.

Read the full article.

Plus, don't miss

Citi Earnings Beat Spurs Optimism

.

From

JPMorgan: Prime Loans Form Dark Cloud

:

The banking titan

JP Morgan Chase

(JPM) - Get Report

said Thursday

Jul. 17 that it could see losses as high as $300 million a quarter by sometime in 2009 in its $47 billion prime loan portfolio, triple from current levels.

CEO Jamie Dimon attributed the rise in prime loans written off to a surge in high loan-to-value jumbo loans gone bad as a result of the poor housing markets.

"We started doing more jumbo

mortgages in '07 and part of that is '07 vintage... and we were wrong. We obviously wish we hadn't done it," Dimon said in a conference call to discuss earnings results this morning. "Prime looks terrible."

The New York-based bank posted a net profit of $2 billion, or 54 cents a share, vs. $4.2 billion, or $1.20 a share, in the year-ago period... The 55% slide in profit was due in part to a $540 million after-tax loss related to the acquisition of

Bear Stearns

completed in May. Excluding the loss, JPMorgan earned $2.5 billion.

Read the full article.

From

Merrill Sheds Profits, Bloomberg (Update)

:

Merrill

Lynch

(MER)

reported a loss of $4.7 billion, or $4.97 per share... It is the firm's fourth consecutive quarterly loss.

Merrill posted $9.4 billion in writedowns and impairment charges, with negative net revenue of $2.1 billion. That figure compares with a positive $9.5 billion a year earlier.

Merrill lost $3.5 billion on U.S. super-senior asset-backed collateralized debt obligations

CDOs, as well as $2.9 billion on credit-valuation adjustments, much of which was related to hedges on those CDOs. It also lost $1.7 billion from investments in U.S. banks and $1.3 billion from residential real-estate exposures.

Read the full article.

From

Don't Bank on More Dividend Boosts

:

Wells Fargo made a bold move in a shaky market by boosting its

dividend

by 10% Wednesday

Jul. 16, but observers say few banks will follow suit amid a still-stressed housing and credit environment.

Wells Fargo shares surged more than 30% Wednesday, after the San Francisco-based bank declared a quarterly common stock dividend of 34 cents a share, up from 31 cents a share. Wells' second-quarter profit of $1.75 billion, or 53 cents a share, beat earnings estimates by 3 cents share, despite a 23% drop from a year ago.

By raising the dividend, Wells wanted to accomplish two things, says Cassandra Toroian, president and chief investment officer of Bell Rock Capital: to "restore confidence in their company/

balance sheet

" and provide an impetus for

short-sellers

to move along and target someone else.

Read the full article.

Cramer: How I'd Save the Banks (Video, Jul. 16)

Wells Fargo will be at the center of the survival plan, says Cramer.

To watch the video, click the player below:

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Plus, don't miss this related "Wall Street Confidential" video:

Cramer: I See Banks' Future

(Jul. 15: Cramer has one crucial thing he does not want you to do right now and has targeted the one bank he sees as a power in the future.)

From

Schwab Shares Rise on Profit Growth

:

Charles Schwab

(SCHW) - Get Report

received $26 billion in net new assets, which stood at $1.4 trillion on June 30, a 1% gain from a year earlier. It had 5% more active brokerage accounts and 13% more retirement plan participants, while banking accounts more than doubled to 355,000.

Despite lower short-term interest rates and a challenging stock-market, the firm limited expense growth and drove pre-tax profit margins up to 39.3% from 35.2%.

Charles Schwab also kept itself largely isolated from direct exposure to subprime housing issues that have plagued other financial firms. CFO Joe Martinetto noted that mortgage delinquencies at the company's Schwab Bank division were 0.33% of outstanding balances at the end of June, much lower than the national average.

Read the full article.

From

U.S. Bancorp Weathering the Credit Storm

:

While headlines this morning

Jul. 15 are bemoaning US Bancorp's drop in year-over-year earnings, at this point in the credit cycle it is silly to dwell on comparison to much better times.

The company posted a 7.5% increase in net revenue year-over-year, as it grew its balance sheet 11% and improved its net interest margin to 3.61% for the second quarter, compared to 3.55% last quarter and 3.44% in the second quarter of 2007.

That's rather impressive. At least through the first quarter of 2008, many large regional holding companies reported narrowing net interest margins over the past year.

Also, so far, US Bancorp has set itself apart from many other regional holding companies by keeping well ahead of nonperforming loans and charge-offs, while maintaining decent earnings performance.

Read the full article.

From

Fannie, Freddie Plan Staves Off Housing Disaster

:

On Sunday

Jul. 13, the U.S. Treasury temporarily increased the department's lines of credit for the two companies

Fannie Mae

(FNM)

and

Freddie Mac

(FRE)

. The plan will also give the Treasury temporary authority to purchase equity in the two companies to increase their capital. Fannie and Freddie also now have access to the

Federal Reserve's

emergency lending window.

The increased federal role may spell long-term trouble for the U.S. dollar, since taxpayers or increased budget deficits are likely to fund any bailout of the mortgage giants.

Nonetheless, saving the housing market from further short-term pain clearly remains a priority among government officials. Housing prices continue to fall across the country due to meager demand and almost record high inventories.

Read the full article.

From

Cramer: What a Fannie/Freddie Recovery Means to You

(Video, Jul. 14):

Giving these mortgage backers money is no solution to the housing mess, says Jim Cramer.

Cramer:

"The civilization, as we know it, is fighting for its solvency. The banking industry -- with the exception of

Hudson City Savings Bank

(HCBK)

... and somewhat,

Goldman Sachs

(GS) - Get Report

-- all seem to have these

subprime mortgages, and the mortgages are defaulting. And they're defaulting so quickly and they're in so many difficult

financial instruments that they are just magnified... Maybe a severe recession should be taken... Maybe we need to start over again... There's no light here at the end of the tunnel... It's great

for people who want to buy homes... Everybody else is worse."

To watch the video, click the player below:

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Plus, don't miss these related videos:

Cramer: Fannie and Freddie's Best-Case Scenario

and

Cramer: It's a Mess Out There

.

From

IndyMac Insurance Tab Could Hit $8B

:

IndyMac

(IMB)

is not likely to be the last bank to go under amid the current crisis.

BankUnited

(BKUNA)

and

Downey Financial

(DSL) - Get Report

are both on very thin ice... and while it is not in immediate danger,

Washington Mutual

(WM) - Get Report

, which raised $7 billion from a group of investors led by private equity firm

TPG

during the second quarter, will be watched very closely when it reports results on Thursday

Jul. 17.

Unwinding IndyMac

When a depository institution is shut down, insured funds in retail deposit accounts are made available almost immediately by the FDIC. While the FDIC usually starts selling off assets immediately when regulators close a bank or thrift, IndyMac was so big that the agency established a successor institution, IndyMac Federal Bank FSB, which will temporarily operate to "maximize the value of the institution for a future sale."

The FDIC said uninsured deposits totaled approximately $1 billion, and were held by about 10,000 depositors.

Depositors with uninsured deposits in a failed institution become creditors to the receivership or conservatorship, and receive "dividends" out of proceeds from asset sales. In the case of IndyMac, these creditors have received an advance dividend of 50 cents on the dollar. They may receive more, but that seems doubtful at this stage. IndyMac's mortgage loans are very difficult so sell in this environment.

Read the full article.

Plus, don't miss this related story:

Jim Cramer's 'Stop Trading!': Indy Was Doomed

.

From

Lehman's Got a Reluctant Safety Net in Uncle Sam

:

Lehman Brothers

(LEH)

is now considering a strategic partnership, buyback plan or asset sale to boost its shares, the Journal said, citing sources familiar with the situation.

Regardless of what steps Lehman ultimately takes to right itself,

Brad Hintz says the government will not allow Lehman or its peers to go under, because of the sheer complexity of assets and the effect it would have in the greater capital markets. As with Bear Stearns, Lehman's trades are intertwined with a number of other banks, and federal regulators stepped in not just for Bear but to support the broader financial system.

Joseph Lynyak, a partner in the bank regulatory practice at law firm Venable LLP, says

Ben Bernanke and

Henry Paulson are talking tough to avoid giving the impression that the feds will step in to heal the wounds of every community bank that lent millions to subprime homebuyers.

Instead, they are trying "to strike the right balance in their remarks to the public," says Lynyak, a onetime honors fellow at the FDIC. "They're concerned about conveying a false impression to the marketplace that they would bail out every institution in every situation."

Read the full article.

From

Goldman Cashes In on Banks' Misery

:

Goldman Sachs has grown adept at making lemonade out of the lemon that is today's financial services industry.

Wachovia

(WB) - Get Report

recently disclosed that it hired Goldman to help it figure out what to do with its giant portfolio of troubled loans. The firm also has also been the go-to advisor when it comes to helping struggling banks raise equity, working with banks like Wachovia,

Royal Bank of Scotland

(RBS) - Get Report

and

State Street

(STT) - Get Report

to raise money amid the stubborn housing and credit slump.

Goldman, already standing out by continuing to earn quarterly profits while its main rivals are bleeding from wounds inflicted by the U.S. mortgage market, appears to be doing an exceptionally good job of making money by helping financial companies dig out of the mess they've found themselves in.

Read the full article.

From

M&T Bank CFO: 'We're Slogging Through'

:

Non-performing loans and foreclosures contributed to a 25% drop in net income for

M&T Bank

(MTB) - Get Report

.

The Buffalo, N.Y.-based bank, which posted second-quarter results Monday

Jul. 14, is the first in a line of regional banks reporting and its report could serve as an indicator of what's to come from the sector during the earning's season.

M&T Bank also recorded significant late loans, which jumped to $587 million from $296 million a year ago. The bank insisted that the numbers grew as a result of an accounting change that makes the bank recognize non-performing loans as those that are 90 days late as opposed to waiting until the loans were 180 days past due. But it did concede that loans to residential builders that were late in making payments also contributed. M&T also has had to digest some $53 million in assets taken in foreclosure, a huge increase over last year's $18 million, also attributed to residential real estate loan defaults. The provision for credit losses increased to $100 million in the second quarter of 2008, from $30 million in the year-earlier quarter.

Read the full article.

From

Fannie, Freddie Media Panic Overblown

:

Fannie Mae and Freddie Mac are dominant players the bond market. Not only are they the biggest non-Treasury issuers of straight-debt securities, mortgage-backed bonds guaranteed by the two giants represent over 30% of the total taxable bond market. Therefore, the problems at the GSEs probably touch just about every investor directly in a way few other companies would.

While delinquencies on their guarantee portfolio remain relatively small (0.81% for Freddie Mac and 1.22% for Fannie Mae), the fact is that both companies employ tremendous leverage, and therefore, losses even mildly above historic norms are likely to put huge pressure on the company's equity.

In addition, Freddie Mac has yet to complete the $5.5 billion capital raise they promised in May, and given market conditions, this will be all but impossible without government intervention. So I'm not here to challenge the plunging share price of either Fannie Mae or Freddie Mac.

But there are three really silly things being reported in the media right now that need clearing up.

Read the full article.

From

Cramer: Blame the Mortgage Insurers

:

The big problems that everyone has from Fannie Mae to Freddie Mac to

Bank of America

(BAC) - Get Report

to Washington Mutual, frankly, aren't the defaults. The default rate for FNM

Fannie Mae mortgages is amazingly low, around 1%.

But it is the personal insurance behind those mortgages -- made by

PMI

(PMI)

and

MGIC

(MGIC) - Get Report

-- that may not hold up, and that's the layer of help that allowed Fannie and Freddie to be so thinly capitalized. We saw the same thing happen throughout Wall Street and with many banks. The insurance may not hold up, so the reserves are therefore way too low.

A few months ago, we were fretting that the collapse of these monolines could put everything in jeopardy. Somehow, because they haven't "collapsed" per se, we thought we had skated by this issue. We haven't. The unwinding of these two companies and the reserves that must be boosted -- because they can't be counted on -- is behind a lot of these capital raises and behind the lack of belief in anything any financial says.

Read the full article.

Plus, don't miss these related stories:

Jim Cramer's 'Stop Trading!': Bush Changes Tune on Fannie and Freddie

,

Jim Cramer's 'Stop Trading!': Avoid Financials

,

Cramer: Poole's Not All Wet

,

Cramer: Feds Step Up to the Plate

and

Cramer: An Elegy for Fannie and Freddie

.

From

Cramer: Fannie and Freddie, Game Over (Video, Jul. 10):

Jim Cramer:

"One of the things that we learned in 1990 was insolvent does not mean bankrupt. When a company's equity is no longer representative of an entity, that does not mean the entity is vanished. What it means is that there is a recapitalization, where the company goes to the bond holders. In this particular case, because of the companies'

Fannie Mae and Freddie Mac quasi nature -- a government-sponsored enterprise -- we don't really know what will occur."

To watch the video, click the player below:

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Plus, don't miss these recent financial sector-focused videos on

TheStreet.com TV

:

Cramer: Wachovia's Survival Plan

(Jul. 9: Cramer talks about the regional bank's need for a 'good bank/bad bank' strategy.),

Cramer: Paulsen, Bernanke Finally Get It

(Jul. 9: Cramer says the Treasury Secretary and Fed chief have finally come to terms with the market turmoil.),

Cramer: I've Written Off Lehman

(Jul. 7: Cramer discusses how to play the big capital grab on Wall Street and why Lehman Brothers' stock is now dead to him.),

Cramer: 'Bailout' Isn't a Dirty Word

(Jul. 7: Cramer says don't believe the hype -- bailouts are good.),

Cramer: What to Do With CIT Now

(Jul. 1: Cramer explains how you should play the big news from

CIT Group

(CIT) - Get Report

.),

Cramer: No Transparency, No Belief in Banks

(Jul. 1: Cramer says the lack of bank transparency means he won't be buying any of the country's top banks.),

Cramer: Banking Doom Is Upon Us

(Jun. 24: Cramer says the banks and the automakers are the stocks that could sink this market.) and

Cramer: If I Were Citi's CEO

(Jun. 20: Hear Cramer run down his checklist of changes he'd install at

Citigroup

(C) - Get Report

.)

From

Dick Bove: Crazy-Smart, or Just Crazy?

:

It's just another day on the job for veteran equities analyst Richard X. Bove when he says Wachovia, its board and its interim management "have no idea how to run this company."

Bove's perception came after the Charlotte, N.C., bank announced last week that it had ceased making option adjustable-rate mortgages. Wachovia's roughly $120 billion option-ARM portfolio has caused the company to take billions of dollars of losses as the housing market dropped, leading the reeling bank to push out CEO Ken Thompson.

"The company has articulated no new strategy; presented no new business model; selected no new CEO; and/or connected with no new acquisition partner. ... These guys ran this company into the ground and they have no idea as to how to get it out of trouble except to stop making Pick-a-Pay mortgages," he writes. "Therefore I am making a suggestion. Hire

former

Morgan Stanley

(MS) - Get Report

CEO Phil Purcell as CEO."

Sometimes he's right, sometimes he's wrong. But the 67-year-old Bove always attracts a substantial amount of attention by voicing confrontational, often on-target opinions of the 27 banks and brokerage firms he covers.

Read the full article.

Go Bottom-Fishing With Bank Options (Video, Jul. 11)

This may be the best time to bottom-fish with battered-down stocks. Options expert Steve Smith explains the best way to cash in.

To watch the video, click the player below:

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Plus, don't miss this related financial sector options play on

TheStreet.com TV

:

When Life Hands You Lehman, Use Options

(Jun. 9: Shares of Lehman Brothers are under pressure, and Smith has a trade to play further weakness in the stock.)

From

Large-Cap Banks: Dividend Cuts Coming

:

This week, TheStreet.com asked several high-profile equity analysts about how the credit crisis is affecting banks and other consumer finance businesses. Today Jul. 8, Jason Goldberg, a senior research analyst at Lehman Brothers, provides his take on the large-cap banks.

TheStreet.com: Capital, capital, capital. This year, a primary focus of investors has been on the ability of banks to remain well-capitalized by regulatory standards, despite the massive writedowns and loan reserving they have been forced to do. Goldman Sachs predicted that banks will have to raise an additional $65 billion before the credit crisis peaks next year. What do you think?

Goldberg:

We expect the industry to continue to deleverage and note that quarter to date, assets are down by roughly $170 billion. Given recent equity raises have not gone smoothly, we would expect more immediate capital needs be served by further dividend cuts, as well as the sale of business units, as opposed to the issuance of common stock, if possible.

Read the full article.

From

Regional Banks: It's All About Credit

:

In this installment, Morgan Keegan Senior Bank Analyst Bob Patten gives his take on how regional banks are faring.

TheStreet.com: What are the fundamental differences between the regional banks and the large universal banks? How has that helped and hindered them as the housing and credit crisis unfolded?

Patten:

It's really about earnings and geographic diversification. The smaller the bank, the more plain vanilla the operations -- loans and deposits, very little fee-income -- so in an environment where banks are shrinking their balance sheets to preserve capital and their increasing their loan loss reserves to deal with troubled debt, the smaller banks have less options to them. They also have

fewer options for capital if they need it. So my concern is in the smaller capitalization bank-land. They're dealing with the same issues that all the big banks are, which are real estate and stressed markets.

It's not as much the fundamentals as it is the macros overriding this group. It's all about credit; it's all about provisions and nonperforming asset growth on the banks' balance sheets. It then comes back to capital adequacy and the ability of the banks to move this stuff off the balance sheets through loan sales and taking charge-offs.

Read the full article.

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.

Read the full article.

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) - Get Report 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) - Get Report

, 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.

Read the full article.

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:

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To stay up to date on the financial sector, don't miss

TheStreet.com's

Banks section

and

Financial Services section

.

This article was written by a staff member of TheStreet.com.