President Obama told top U.S. bankers on Monday they owed the country their help in lifting the economy out of crisis by lending more money and backing financial reforms. Is it time to invest in the financial sector? Chris Mutascio, managing director and bank analyst at Stifel Nicolaus, shared his insight.
Mutascio said that the banks that are still facing difficulties with credit losses are likely going to continue to struggle over the next several quarters.
“If you look at some of the banks, they’re not making a lot of money right now and many of the banks are actually losing money in the third quarter—and they’re probably likely to lose money in the fourth quarter and into 2010,” Mutascio told CNBC.
“I think it’s a little bit misleading for Obama to think that you can have the Treasury Department and the Federal Reserve coming down on these banks to raise capital and, at the same time, force them to lend," he said. "You can’t have it both ways.”
But Mutascio said he likes Bank of America and Wells Fargo .
“We do like BofA for the reason that it’s now out from under TARP,” he explained.
“They don’t have to constrict the balance sheet because they know what the capital guidelines are going to be. They just got the OK to do so... And we think it’s fairly inexpensive right now.”
- Watch Mutascio's Previous Appearance on CNBC (July 21, 2009)
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Mutascio has investment banking clients who own shares of BAC and WFC. Additionally, Stifel Nicolaus maintains a business relationship with Wells Fargo.