FYI, a snippet from today’s research note from KBW (a boutique financial institutions-specific investment banking firm):
[from the third paragraph: “…most of the criticism in the YouTube video is not fully informed on the specifics of the transaction and we are surprised that the FDIC felt compelled to respond to misinformed criticism outside the mainstream media.”]
“After a rapid beginning to the year, the FDIC has slowed the pace of bank failures to a trickle in the last two weeks, with only one $18 million asset bank failure. This compares to seven bank failures in the same two weeks one year ago (three in the week preceding the Super Bowl and four in the week preceding the President’s holiday weekend); and follows a torrid pace in January with 15 bank failures, double the pace of last year.
There appear to be two possible explanations for this slowdown: snowstorms in Washington DC in recent weeks or political pressure to slow the pace of failures. There is at least some indication of political pressure slowing the pace of failures as the FDIC took the unusual step of responding to a YouTube video critical of its transactions with OneWest Bank. A slowdown in the pace of failure has implications for share prices, in our view, as the share prices and valuation of banks that we believe will benefit from rolling up failed institutions have been strong. If the FDIC retrenches and reevaluates its sale process, we would expect those share prices could fall back and begin underperforming in the near term. Nevertheless, sooner or later the pace of bank failures will accelerate, in our view, allowing ample opportunities for outperformance by this group of banks.
The FDIC apparently felt compelled to respond to a YouTube video that criticized its sale of Indymac to OneWest Bank. The link to the YouTube video is: http://www.youtube.com/watch?v=sBLwLIPvcJU; and the link to FDIC’s response is: http://www.fdic.gov/news/news/press/2010/onewest_lossshare.html. This is unusual, in our view, as most of the criticism in the YouTube video is not fully informed on the specifics of the transaction and we are surprised that the FDIC felt compelled to respond to misinformed criticism outside the mainstream media. We believe that the need to respond was likely political as the video may well have made its way to a Congressional representative and back to the FDIC. We expect that the FDIC may be sensitive to this criticism of the Indymac sale as it did make an additional sale of a failed institution to OneWest Bank in December. We do note that the makers of the video did amend the video subsequent to the FDIC response.”