Stress Test results indicated that STI had to raise the most money as compared to it's equity. Looks like the $2.2 bn the gov't wants them to raise compares unfavorably vs the roughly 8 billion in capital, or 28% which is 4% worse than RF's 24% (2.5 bn). The stock has risen more than 100% since before the stress test was revealed by Obama administration, and now trades at close to 70% of book value-- even though book value could be further impaired by future losses. This may sound cheap, if not compared to the just over 30% of book value RF and KEY trade. Also don't like the fact that STI owns Robinson Humphrey since 2001, an investment bank. Don't know if that's a risk, but any investment bank combined with a regular bank seems risky these days, as investment bank balance sheets are generally opaque. Of the 3 riskiest banks in the bottom tier of the stress test results (of 19 evaluated), KEY has the lowest capital required (20%) and is tied with RF in price/book. Additionally, KEY was first to announce capital raisings, which was smart given the sell-off of financials after stress tests revealed a big money-raising event about to occur. (not as smart as WFC whom announced a money-raising within 24 hours of stress test results). Not a believer in the Warren Buffett fairy dust that surrounds this one, it makes no sense that he owns it. He's had his rough spots in banking and financials (Salomon Bros, General Re, derivatives etc..), so his timing has hardly been impeccable. STI is a TARP reciever, a double-dipper in fact, the ability to trust it seems diminished. source: http://www3.gsionline.com/legalcurrents/Article_20090108_E1.a... So it stands to reason why Buffett is a big Obama supporter, Obama supports the TARP, and SunTrust would likely be gone without the $3.5 bn first-TARP investment, and then the $1.35 bn double dip TARP. This is gross taxpayer financing of a bad institution, and Buffett ought to be ashamed of himself. Instead of asking all of us to pay death taxes, why don't he do the taxpayer a favor and donate some of his riches to SunTrust himself, instead of letting the government save his investment?
$15.03 (05/15/09)
