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Archive for June 20th, 2011

BAC: Shrink in China Too?

Bloomberg has a very interesting dispatch reporting that Bank of America is looking to unload part of its investment China Construction Bank Corp. in order to raise captial. The nut:

Bank of America has been selling assets including its Balboa insurance unit, First Republic Bank and BlackRock Inc. to boost capital and focus on core clients. The firm can build capital through earnings and doesn’t need to issue stock, Chief Executive Officer Brian T. Moynihan, 51, said last week. Capital surcharges on the largest banks may crimp lending and drive off investors from financial firms, he said.

And BAC’s cozy relationship with the Treasury Dept. and Team Obama makes me wonder if selling off the Chinese interest also functions as a warning to Beijing: You stop investing in us, we’ll stop investing in you. Even if Washington does not intend to send such a message, I guarantee it will be interpreted as such among some overseas investors and interests who are very attuned to such shifts in positions among “insider” firms.

Update: On cue, a take on new Russian bank investment in Austrian banks through the lens of geo-political importance.

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Your Continued Housing Recession

The WSJ teams with Zillow to confirm the obvious: without jobs a housing market cannot recover.

…Zillow spotted 25 places that are within single-digit percentage points of their home-value peaks. (Zillow found no communities where values have surpassed their high-water marks.) … Look at North Carolina, where three communities appear on the Zillow list. Although North Carolina’s unemployment rate is higher than the national average, all three communities are lower than the state rate. Jacksonville, where values are just 0.1% below their peak, is the home of the Marine Corps’ Camp Lejeune and New River Air Station. Fayetteville has the Army’s Fort Bragg and Pope Air Force Base. And Durham is one of the vertices of the Research Triangle conglomeration of universities, state and federal government offices, and government, nonprofit and corporate research facilities.

Char-Meck, of course, has been at or above the statewide jobless rate for almost three years now. As a result home values are anywhere from 10 to 20 percent off of their peaks, sometimes more in the case of condos and especially hyped developments. Local home values cannot recover without jobs. Private-sector jobs. Where will they come from?

BofA? Under siege. Wells? Laid off another 1000 the other day. Duke? In the middle of a defensive merger and still hounded by Indiana regulatory officials. The construction industry? Ha!

Obviously this is the perfect time for a $70m. property tax increase.

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June 2011
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