Tags: regional | banks

Regional Banks On the Brink, Again

Monday, 27 Jul 2009 11:46 AM

By Gene J. Koprowski

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Several dozen "major" regional banks have quietly crawled out to the ledge of a new cliff in recent weeks as rapidly mounting loan losses on residential and commercial real estate imperil their solvency, warns columnist John Markman.

At risk are sizable institutions like KeyCorp., Synovus Financial, Marshall & Ilsley, and Regions Financial. There are new worries about their ability to roll over their debts, attract new customers, and otherwise finance their operations.

"While the market and the White House are distracted by matters like health care reform and Wall Street pay, some industry experts fear that these banks — the backbone of credit distribution in smaller towns around the country — are headed for a sequel of the winter crisis," writes Markman on MSN Money.

Markman reckons that the story of the second half of 2009, in fact, may be this problem brimming into the public consciousness again, as the cash flow problems besetting troubled lender CIT Group ooze out into the broader banking community.

"I think there is clearly more bad news to come," Michael Diana, a veteran banking analyst at Noble Financial Capital Markets, told MSN.

That's bad news, but, as Alan Abelson writes in Barron's, "things could be worse."

Abelson opines that the "genius" of the idea that things could be worse is that "shy of the planet going up in smoke, it's indisputable. What's more, it applies to the economy at large and to every company no matter how close it may be to giving up the ghost.

“On the latter score, it has become the standard bullish analysis of companies reporting awful earnings compared with a year ago, or none at all.”

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