Big Banks Resist New Limits Proposed by the Federal Reserve
The Paragon Report Provides Stock Research on Morgan Stanley and Goldman Sachs
NEW YORK, NY, May 01, 2012 (Menafn - MARKETWIRE via COMTEX) --Banking stocks have continued to impress investors in 2012. TheSPDR KBW Bank ETF (KBE) is up nearly 19 percent year-to-date. But newrules and limits proposed by the Federal Reserve look to have anegative impact on the Banking Industry. The Paragon Report examinesinvesting opportunities in the Banking Industry and provides equityresearch on Morgan Stanley MS and Goldman Sachs Group, Inc.GS.
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Last December the Federal Reserve had proposed tougher standards andsupervision for the "Big Banks" whose failure would jeopardize theU.S. economy. The central bank set a limit of 10 percent for creditrisk between a company deemed "too big to fail" and theircounterparty, which would come into effect if each party had a totalof 500 billion in assets or more. "The Federal Reserve has providedno basis to determine that imposing the dramatically lower andarbitrary 10 percent credit limit on certain major covered companieswould even help mitigate risks to the U.S. financial stability, muchless be necessary," according to a letter sent to the central bank byfive banking trade groups obtained by Bloomberg News.
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Morgan Stanley's fixed income trading unit will likely see majorstruggles if they receive a three-level downgrade from Moody'sInvestors Service. According to Brad Hintz, analyst at Sanford C.Bernstein & Co., the downgrade could potentially slice 30 percent offrevenues derived from fixed-income derivatives. "The potentialdowngrade makes it more difficult for MS's fixed-income business tosustainably outperform," wrote Hintz.
Goldman Sachs Asset Management Chairman Jim O'Neil has beenapproached by Britain's Finance Ministry as a potential candidate forthe next governor of the Bank of England according to the SundayTimes. The company recently reported 2012 first quarter earnings percommon share of 3.92 and increased the quarterly dividend to .46per common share.
Paragon Report provides Market Research focused on equities thatoffer growth opportunities, value, and strong potential return. Westrive to provide the most up-to-date market activities. Weconstantly create research reports and newsletters for our members.The Paragon Report has not been compensated by any of theabove-mentioned companies. We act as independent research portal andare aware that all investment entails inherent risks. Please view thefull disclaimer at: www.ParagonReport.com/disclaimer
SOURCE: Paragon Financial Limited
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