Green Shoots In Housing - Finally

April pending home sales of existing homes - which measures contract signings--stronger than expect - April, up 6.7 percent, much better than expectations of a gain of 0.5 percent.

Helping: historic high affordability rates, with an $8,000 1st time buyer tax credit.

Now the test: mortgage rates are up about a quarter point from their recent lows (about 4.75 percent), will that make a difference?

Housing stocks trading up 4 to 6 percent this morning.

How many more banks need to raise capital, and how much? So today we have JP Morgan, Morgan StanleyandAmerican Expressraising capital, all eager to repay the TARP. But how much more capital raising will be necessary from the 16 other banks that took TARP money?

The problem is the exact amount of Tier One capital and tangible common equity that will be required might be a moving target.

Still, Deutsche Bank took a stab at this morning. Their assumption: that JP Morgan's current capital raise, which will raise Tier 1 capital to 9.3 percent, and Tier 1 common equity will be 7.3 percent, will be the new target for banks.

Based on this assumption, Deutsche Bank estimates 7 of the 16 banks will need to raise money:

  • Wells Fargo $30 b
  • B of A $5-$10 b
  • PNC $4-$5 b
  • Fifth Third $1 b

MTB, US Bancorp, andZions Bancorpalso will need to raise small sums of money.

These sums - while not trivial (certainly not in the case of Wells Fargo), are certainly attainable, and the indications are that the market is able and willing to absorb these additional needs.




Questions? Comments?