AP: Regions Bank needs additional capital

This isn’t football, but it does matter to people in Alabama. The AP is reporting, “American Express Co., JPMorgan Chase & Co. and Bank of New York Mellon Corp. will not be asked to raise more capital when federal officials announce the test results Thursday afternoon, but Regions Financial Corp. will need to bolster its reserves, according to people briefed on the results. …A spokesman for Birmingham, Ala.-based Regions Financial could not immediately be reached for comment.” (read the entire AP report embedded below.)


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  1. 1

    I guess Regions will have to cut back on all those Spanish Billboards in Houston.
    Habla Cash Regions ?

  2. 2

    This doesn’t seem to be a big deal, the earliest word of this was from May 4th and the stock is up for these last few days. They are not alone in this boat.

  3. 4
    Tax Man

    I’m all for the federal government telling banks, auto companies, insurance companies how to operate their businesses. I’m also for government taking over parts (all) of these sectors of our economy. I mean everything they touch turns to gold. Look at what a good and fiscally responsible job they have done in handling money in DC. Lets just appoint a politburo and be done with it.

  4. 5

    Tax Man, could you explain to me why it matters if a bank has stock that is preferred or common? I am clueless why Tangible Common Equity is so important to regulators.

  5. 6
    Tax Man

    Preferred stocks normally (and normally is the operative word) get first shot at dividends or even potentially a small portion of profits. Sometimes preferred stocks can carryover a guarenteed ROI % from year to year until paid off. Classes of stock can get very complex. Common stock value is based soley on declared dividends and market price. What I find so diabolical is the government would like to take the banks that can not raise capital to meet the stress test levels (and we have no idea what the stress test is exactly, there is no transparancy)and turn the money they give these banks into common stock thus giving the Federal Goverernment an ownership stake and voting wrights in the bank. Doing this is not only backdoor nationalization it also devalues the common stock that legitamate shareholders have purchased.

  6. 7

    If we view it through that lens, the emphasis on tangible common equity is all about getting common shares to control the bank.

    Much like TARP banks caved on the Chrysler bankruptcy deal where unsecured debt is paid over secured debt thanks to death threats, government pressure, etc.

  7. 8
    Tax Man

    Exactly, under government duress who would want to loan money to “unstable” financial institutions. It is depressing to see where our nation is heading.

  8. 9

    That’s why I’m long FXI, CHN and X. China is more capitalist than we are now. I’m betting China’s economy is about where the US was at the end of the Korean War. I’m afraid the US economy is about where the UK’s economy was at in the 1960’s and 1970’s thanks to nationalizations, etc.

  9. 10
    Tax Man

    I have enjoyed conversing with someone as well versed in finances as yourself, unfortunately it is back to work.

    P.S. I now know if I talk inteligently about something other than finances I can run off ballplay and julio.

  10. 11

    It is fun to talk about this stuff. Thanks for the answers earlier. Every time I read about tangible common equity and how preferred shares would be converted to common—all I was thinking is that this has to be a shell game.

    Looks like it was!

  11. 13

    Yeah — Regions Bank forcing to loan cashflow to people who they damn well know can’t pay off what they’re wanting. This bank ain’t worth a shit — and if they want a “bailout” — it’s all the more reason to “hate” what’s going on right now in the corporate world.

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