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Fed Policy Winners and Losers

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  • Description

    FBN's Charlie Gasparino breaks down banks profiting and losing in a low-interest-rate environment .

  • Duration 3:30
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-- Financials -- gonna drill down here so today from the Fed we heard no higher rates no QE3 not a fixed -- anyone really.

So what's the impact if you are investing in bank stocks right now -- I was here for -- like Charlie.

I guess I'm saying there's no story.

No Q3 no -- in south but sit but there is a story it is winners and losers on this fed policy and it's pretty interesting I was hoping that analysts today.

Look at the banking sector and there's been a lot of negative stuff going on there are out there about the big banks about the city groups JPMorgan -- -- Those are and you see it right there the winners here why are -- the winners when you keep interest rates at zero.

Basically lower their borrowing cost what does that do well all these banks have what securities firms.

B -- -- owns Merrill Lynch Citigroup has its own securities themselves psalms musical -- Smith Barney.

And JPMorgan has its own you know -- brokerage business you know security business if you can borrow at zero.

You -- buy treasury bond that very you -- trade.

You can make some money and that's why all those big bank stocks are up.

However conversely.

It's really -- -- -- regional banks and when you talk to analysts took that a major analysts out -- guys like Mike -- Who -- who know a thing or two about regionals they all have -- ratings every -- why is that.

When you keep interest rates at zero -- for them to make money on their bank deposits it's a very scary situation.

If you're regional bank and -- -- -- people to what lay offs that could at the big securities firms we have 0% interest rates.

Well why would you be laying people off when they they're gonna that the securities firms parts of these banks are gonna make money.

It's almost impossible not to.

But at the same time it's easy to make money so why you need all the experts only on these trading -- I mean they're not taken very much risk -- wanting less risk so buying treasuries because you're buying it -- money that well it cost you nothing.

Is -- there is something known as scale and not only that you do deals and you'll see deals and -- tea.

I know there's a lot of negative about the about the big Wall Street firms but in a very low interest rate environment it is being in this and it's almost.

It's almost a universal -- law that.

Those firms do very well now there's other things stored up capital requirements about three and all the said Dodd-Frank implications yeah that's bad.

But when you have 0% interest rates -- sale point that you pointed this sort of while we here in one deal member of.

What the banking are operations of RBC -- it was Monday they announced deals.

They bought that and this came out in the -- -- Mike -- brought it up big what that for something like 97%.

At a book -- -- -- -- it below.

Hinge it will book value that is amazing.

-- just shows you those -- operations are not make a lot of money in a low interest rate environment.

You can get you know those those regional banks bank operations are not worth as much interest in net interest margins net interest margin skis and -- borrow at zero and -- long.

Every -- it's it's it's kind of makes sense it makes sense and so it was and -- -- -- that means we're gonna have a miss apartments real Wall Street as you know.

Wolf refers people talk about -- I don't think they're gonna be severe some of those other reports.

But clearly.

Low interest rates and nothing coming out of -- I mean this is kind of a non story.

We'll see what would -- what kind of questions he at the you know -- -- get another Jamie -- moment and someone really breaks his chops and says.

-- tell -- about banking regulations how that's hurt the economy maybe get -- like that maybe opens up a little -- but barring anything.

Like that coming out of this press conference I -- say there's nothing much here.

Are right Charlie I guess we'll have to see far south now thanks as always.

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