Here's an important read this morning about the banks. Our window of opportunity to grab once in a lifetime REO deals from banks may not be here for long… Your timing is great as I will be talking about this and more this Wednesday in my Free Foreclosure Investor Webinar, at 6pm Pacific (9pm Eastern) with a three of my successful client panelists (Andrew Holmes, Joas Miller and Coach Mary Kay). You can't afford to miss this! (Register here early we we do fill up.)
Buffett's Bullishness Is an All Clear on Banks
by Jim Cramer, Real Money
Where is Nouriel Roubini to criticize Warren Buffett? Where is Paul Krugman? Here we have the foremost investor of our lifetime saying that the stress tests are unnecessary for 15 out of the 19 banks out there. He then says that Wells Fargo, U.S. Bancorp and M&T Bank are all fine.
Put aside M&T — two of the banks the Roubini/Krugman mob have to think are insolvent are WFC and USB, as both swallowed other bad banks — Wells bought Wachovia and U.S. Bancorp bought Downey — and now both have Buffett's blessing. The others don't matter under Buffett's regime given that they are so small they can be bought by the FDIC. We know that Goldman's (GS) not a problem, they could pay back the TARP money tomorrow.
So what does that leave? Just two banks: Bank of America and Citigroup. These are the two that are the real issues, and to me these can survive through forbearance, even as zombie-style institutions. Bank of America's denial of the need to raise money, by the way, seems hard to believe, but then again, they are making a ton of money just being in business, too.
Between the Treasury and Buffett, I trust Buffett. Among Treasury, Buffett and the professor/columnist cabal, I most definitely prefer Buffett.
The defense of USB and certainly WFC by Buffett has to do with the huge amount of money they make every day when they turn the lights on. Buffett has a ton of businesses related to housing, so presumably he has a handle on the mortgage side of things. He also knows the yield curve, particularly the two-to-10 spread, which is also fantastic.
To me, if there are only two meaningful banks that will fail the stress test, Citi and Bank of America, according to an extrapolation of Buffett's words, we are home free, no matter what the Treasury says.
I think this means the stress test issue, public or private, is now behind us.
Time to move ahead and get our buying hats on, buying bad assets from these banks, while they're motivated to sell them at big discounts. Not all banks and not all their properties, are they willing to let go for a song. That's where I can help you… learn how to prioritize your time and efforts… so you don't spin your wheels. Do make sure you register now for Wednesdays Free Foreclosure Investor Webinar, where I will show you this and more at 6pm Pacific (9pm Eastern). CLICK HERE.
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