Dear Mr. Geithner - Uh, Thanks But No Thanks

Dear Mr. Geithner, go pound sand: yesterday, Bank of Florida that it was withdrawing its application for TARP funding: "...details of what the government now expects of TARP recipients, and the heightened oversight and cost that may result, have made it clear that the current structure of TARP is no longer in line with our strategic initiatives, which include potential acquisitions," the bank said in a statement.

As a final slap to the TARP, CEO Micheal L. McMullen said, "we believe there are other more stable and less burdensome sources of capital, if and when we need them."

From what I understand, Bank of Florida is one of the few banks that have not been notified of preliminary approval to receive TARP money, so the withdrawal process may be simple for them.

For those that have actually taken money, traders continue to believe that the process will be more drawn out than simply sending a check.

Most traders continue to believe that regulators will not accept TARP money back until the stress test is completed in April and uniform rules for returning the money are promulgated.


1) I am my own Good Cop, Bad Cop: the president is again meeting with the heads of the largest financial institutions. Having beaten up on them in the last week, traders are assuming that he will play the conciliation card this time and emphasize the "partnership" part of the process.

2) General Motors up 10 percent pre-open: although the WSJ is reporting that GM is unlikely to hit the goal of a March 31 deadline for getting concessions from unions and bondholders, the FT is saying this morning that they are not expecting to ask for additional aid.

3) Looking for a housing bottom? It may not be coming yet. Jeffrey Mezger, CEO of homebuilder KB Home cautioned that he sees "no meaningful improvement in market conditions for the remainder of this year."

Despite those comments, KB Home is trading up 5% pre-open after reporting a smaller-than-expected Q1 loss as the number of writedowns fell significantly. The company saw a 26% rise in net orders, as its cancellation rate fell to 28% from 53% the year before.

4) Consulting firm Accenture is down 10% pre-open after reporting a disappointing Q2 earnings report. In addition to missing estimates by 9 cents amid weaker sales, the company reduced its 2009 outlook to $2.60-$2.67, well below the $2.79 estimate.

5) Auto component manufacturer Johnson Controls announced it would close 10 plants, eliminate an undisclosed number of jobs, and take a $200 million restructuring charge in the second quarter. The company continues to feel the effects of weak auto production, and lowers its North American auto production forecast to 8.8 million units, down 500,000 units from its prior estimate.




Questions? Comments?