These small-bank stocks are good values now

Tiny financial services companies could see big benefits from new regulations

SAN FRANCISCO (MarketWatch) -- Every Friday afternoon for the past year, it's been the small-bank death watch: Which U.S. bank would federal regulators seize next?

In 2009, it was 140 banks stretching from Florida to Washington state. The number is 85 and counting so far this year, including two failures announced late Friday.

Yet with federal banking reform moving ahead this week, shares of the smallest community banks are a good bet on any recovery in the credit cycle, say money-managers and industry analysts, who are becoming more bullish about a turnaround for banks with assets of $1 billion or less. See how financial stocks fared on Friday.

"We're in value territory for the right banks," said Michael Natzic, senior vice president of Stone & Youngberg's Community Bank Group, which tracks 60 California banks. "The strong will continue to get stronger and the weak will get weaker."

Branching out

Like their larger peers, tiny community banks have been struggling under the weight of the massive credit crunch. Since the end of 2007, when the U.S. recession took hold, the SNL Small Bank Index is down 36% as of June 24, compared to a 14% decline for the S&P Small Cap 600 Index and a 23% drop for the Russell Microcap Index.

Yet lately small bank stocks have been gaining traction. So far this year, the SNL Bank Index is up 14%, outpacing the 2% gain for the S&P Small Cap Index and a 3% gain for the Russell Microcap Index.

Investors and analysts who specialize in microcap banks say the ones that will emerge from the economic downturn in stronger shape are the banks that didn't make too many loans on speculative construction of commercial buildings, strip malls, or housing developments.

Debt pressure

For others, the picture is more ominous. Sinking commercial real estate projects have hammered bank profits, forcing companies to write-off bad loans and to allocate capital to shore up loan-loss reserves. For some banks, bad loans have become overbearing and regulators have moved in.

Moreover, many small banks are trying to pay back TARP monies, while commercial real estate vacancies and loan defaults are both still high.

G-20 leaders to discuss economy, global rebalancing, capital

Canadian prime minister says he 'seriously doubts' G-8 will be replaced by G-20

TORONTO (MarketWatch) -- The U.S., Europe and other G-20 countries are expected to spend Saturday and Sunday sparring over the proper timing for withdrawing fiscal stimulus packages, the need to rebalance global growth and the necessity for banks to hold more capital as a cushion against future economic disasters.

There is hope among members that the countries can get closer to reaching a consensus by the time leaders have their next meeting in Seoul, Korea in November on how much capital banks around the world should hold to ensure they can survive future financial crises.

"There is much more consensus that the global system was under-capitalized," said Bank of Canada Governor Mark Carney in a radio interview. "It [new capital standards] will apply equally to Canadian banks as it does to American banks, European banks, Japanese banks and emerging-market banks."

Carney added that Toronto has been a useful summit already to help "push people" to make some decisions and restrict the range of discussion about what capital levels each country's institutions should have.

However, Simon Johnson, a Massachusetts Institute of Technology Sloan School of Management professor and a former International Monetary Fund economic counselor, believes that the capital requirements G-20 leaders will agree on fall short of what is necessary to protect against future economic crises.

"Most indications are that they will seek tier-one capital requirements in the range of 10%-12%, which is what Lehman had right before it failed," Johnson wrote recently. "How would that help?"

G8 won't fade away: Harper

The G-20 includes 19 major economies plus the European Union, and encompasses more than three-fourths of global output and two-thirds of the population. It includes the G-8 -- America, Canada, France, Germany, Italy, Japan, Russia and Britain - a group that met in Huntsville, Canada, on Friday. In addition to the G8 countries, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Turkey, Saudi Arabia, South Africa and South Korea, are members of the G-20.

On Saturday, after the conclusion of the G-8 summit in Hunstville, Canadian Prime Minister Stephen Harper said the Group of 8 world leaders known as the G8 is an essential organization that will not disappear, responding to assertions that the organization will be replaced by the year-and-half old Group of 20 world leaders.

"I think there is greater understanding of the necessity of like-minded advanced countries who can exchange views in much less formal setting and who can quickly bring resources to bear on certain world problems," Harper said to reporters. "The G-20 has done an amazing job in year and half, of responding to the economic crisis. But there are limits to what we can discuss and what we can achieve in a group of 20, which leads to much less informal discussion and much less commonality of purpose."

Goldman told to pay creditors in Bayou scam $20.6M

Goldman Sachs Group Inc. has been ordered to pay $20.6 million to scammed investors who say the investment bank should have known about the Ponzi scheme pulled off by the collapsed Bayou Hedge Funds.

A three-person arbitration panel of the Financial Industry Regulatory Authority held two of the bank's units, Goldman Sachs Execution & Clearing and Spear Leeds & Kellogg, liable in the dispute.

Stamford, Conn.-based Bayou collapsed in 2005, after the firm's then-CEO Samuel Israel III and Chief Financial Officer Daniel Marino admitted they lied about the company's profits and set up a fake accounting firm to falsify audits.

The $20.6 million award represents the money Bayou deposited into its accounts at Goldman, said attorney Ross Intelisano of Rich & Intelisano LLP, a New York firm that represents investors in securities cases. Goldman handled all of the hedge fund's trading between 1999 and 2004, when it stopped trading altogether, he said.

The fraud totaled about $250 million. The victims were mostly individuals who invested relatively modest amounts, about $300,000 to $500,000, he said. They were promised annual returns of 10 percent to 12 percent.

The Goldman money, when added to other funds recovered, will result in the investors getting back a total of about half of what they lost, according to Intelisano.

The case, heard by the FINRA panel, centered on the Bayou investors' claim that Goldman either knew or should have known of the deception, because it had marketing materials claiming consistent investment gains as well as account records showing losses.

"They should have done an investigation," said Intelisano. "They would have discovered, at least, that there was something wrong."

"We are disappointed with the award and are considering our options," said Goldman spokesman Ed Canaday.

Arbitration cases are rarely overturned, however. Intelisano maintains that the award will encourage other brokers and clearing houses to act if there is an indication their clients engage in questionable activity.

"I don't think that this is the last time that someone's going to steal money at a hedge fund," he said. "Now the firms that clear all those trades will have to pay more attention."

Israel and Marino pleaded guilty in 2005 to conspiracy, investment adviser fraud and mail fraud. Israel was sentenced to 20 years in jail for his role in the scheme, then staged his own suicide in 2008 in an attempt to avoid serving the time. He turned himself after a month on the lam.

Firing attack in Jinnah Hospital lahore Emergency ward

News Alert!
The resources say at least 12 peoples killed in the firing on the jinnah hospital emergency wards to day night. From some days lahore is in under the terrorist. On Friday 28 may, near about 80 peoples are killed in the firing on the two Masjid's of the Ahmedi's group. Some resources says that there are two reasons on the attack of the jinnah hospital, one is that some peoples which are arrested for relation on friday blast, whose are admitted in the jinnah hospital lahore and other says that 28 may injured are admitted in the emergency ward, so terrorist want attack on them. But one thing is clear that some thing is not happening good in punjab, specially Lahore.

Deadly Cyclone Laila slams into India, causing mudslides and power outages

Hyderbad, India
The death toll from a powerful cyclone that slammed into southeastern India, toppling power lines and triggering landslides, has climbed to 23, a top official said Friday.

The storm plunged a large swath of coastal Andhra Pradesh state into darkness when it hit Thursday packing strong winds of 60 miles (100 kilometers) per hour. The storm made landfall near the coastal town of Bapatla, about 250 miles (400 kilometers) southeast of Hyderabad, and waves as high as 9 feet (3 meters) lashed the coast.

Even before the cyclone hit, some parts of the state had received up to 1 foot (32 centimeters) of rain. Officials said at least 23 people have died since Wednesday when heavy rains began. At least 55 fishermen were reported missing, although authorities had ordered fishing vessels to stay in port.

State welfare agencies evacuated more than 50,000 people from low-lying villages ahead of the storm.

The latest deaths included four people killed in a landslide near the city of Vijaywada late Thursday night, state revenue minister Dharmana Prasad Rao said. Another four deaths were reported in nearby Nellore, Guntur, and Prakasham districts.

Strong winds uprooted trees, power lines and billboards, blocking roads in many places. Nearly a dozen towns and more than 1,400 villages in six districts were hit by power outages, state officials said.

More than 10,000 people died when Andhra Pradesh was struck by its worst cyclone in 1977.

In northern India, a powerful thunderstorm Thursday caused 10 deaths. Six died when their homes collapsed near the town of Allahabad in Uttar Pradesh state, officials said.

Election 2010: Labour slumps to six month low in latest ICM poll

Labour's election campaign suffers a fresh blow with support for the party slumping to its lowest level for six months, a new ICM poll for The Sunday Telegraph has found.In the latest Sunday Telegraph/ICM opinion poll, the Conservatives are up two points on 35 per cent, the Liberal Democrats are up one on 31 per cent while Labour is down two on 26 per cent – compared with the last poll by ICM last week.

While giving the Tories a clear lead, the poll shows that they are still well short of where they need to be to win an overall majority.

With less than two weeks to go before 6 May, the figures also suggest the Lib Dem bubble has not burst. All respondents were polled after the second televised election debate between the three main party leaders last Thursday.

If the figures were repeated on polling day, they would give the Conservatives 284 seats, Labour 232, and the Lib Dems 102 seats. The Conservatives would be the largest party but still 42 seats short of a majority.

Labour and Liberal Democrats would be able to form a majority coalition – but only just.

The Tories will also be buoyed by the fact that the Liberal Democrat vote is less solid than the other parties. Only 56 per cent of Lib Dems say they have definitely decided to vote, compared with 78 per cent of Tories and 74 per cent of Labour.

The Lib Dems are attracting the most support among 18-34 year-olds.

Asked who would make the best economic team, 30 per cent voters picked David Cameron and George Osborne, while 27 per cent picked Gordon Brown and Alistair Darling and 22 per cent picked Nick Clegg and Vince Cable.

John Curtice, professor of politics at Strathclyde university, said: "The Prime Minister is in danger of leading his party to its worst electoral defeat since 1918. At 26 per cent, the party’s poll rating is even less than the 28 per cent it secured under Michael Foot’s leadership in 1983.

"It seems unlikely Mr Brown would survive long as Labour leader should such an outcome occur on May 6th. Only the vagaries of the electoral system potentially stand between Labour and complete disaster."

ICM Research interviewed a random sample of 1020 adults aged 18+ by telephone on 23rd April 2010. Interviews were conducted across the country and the results have been weighted to the profile of all adults.

Tories bank £1.45 million in donations in first week of election campaign - twice that of Labour

Wealthy Tory supporters swelled the party's election war chest by nearly £1.5 million in the first week of the campaign - nearly double the amount Labour wrung from its backers.

Gordon Brown was bailed out by two unions that threw more than £600,000 into Labour's campaign to try to match Tory spending.

Donations to the big two parties dwarfed the £20,000 given to the Liberal Democrats - and entirely failed to prevent Nick Clegg's poll breakthrough thanks to the free exposure provided by the leaders' TV debate.

Half of the LibDem's paltry donations came from longstanding supporter Paul Strasburger, a figure touched by controversy since he helped the party's disgraced benefactor Michael Brown in his legal battle against fraud charges.

The donations in the week after Mr Brown announced the election date on 6 April reinforced David Cameron's heavy advantage in campaign spending power.

Among the 33 contributors to the Conservative's £1,455,811 total named by the Electoral Commission yesterday were City fund manager Michael Spencer, whose IPGL company gave £250,000, and manufacturing tycoon Chris Rea, who gave £100,000.

The Commission's list of donations does not include smaller gifts of under £7,500. Tories claimed yesterday that they have received £250,000 in payments of £50 made by ordinary supporters.

Liberal Democrats banked only £20,000 from big-spending backers in the first week of the campaign, with £10,000 each from longstanding supporters Paul Strasburger and Stephen Dawson.

Mr Strasburger, who runs property and security companies, helped Michael Brown with his legal defence.

Liberal Democrats took £2.4 million from Brown, money that boosted its 2005 election effort, before his reputation collapsed.

Brown fled the country and was convicted of fraud and sentenced to prison for seven months in his absence in 2008.

However Mr Clegg's party is thought to have pulled in £120,000 in small donations after his dramatic success in the leaders' TV debate last Thursday.

Tories accused Labour of relying on union paymasters. Party chairman Eric Pickles said: 'Not only is Gordon Brown failing to convince voters, he’s also failing to convince donors.

'With his campaign in trouble, he turns again to the striking unions to bankroll his tired and discredited party.'

But former Labour Cabinet minister David Blunkett said: 'The support that Labour are receiving from ordinary people - many of whom have not been party activists in the past, but are drawn to us now because of the vision we're offering for the future and the threat posed to that by the Tories - is breathtaking.'