The Best Financials

Gerard Cassidy of RBC Capital Markets feels the financial recovery is gonna take awhile.There's gonna be a lot of fits and starts.The securitization market is still frozen.That's a critical part to getting consumers spending again.If you have to invest in financials,invest in a capital markets bank such as Goldman Sachs or Morgan Stanley,Mr.Cassidy advises.Such banks are less exposed to the consumer.Goldman Sachs reported earnings that were far better than expected yesterday,and is raising capital through a stock offering ,so it can pay back the money it received from the Troubled Asset Recovery Program.

AmEx To Receive Funds

American Express will be receiving federal loans and other backing now that it is a commercial bank.The U.S. Treasury will inject 3.37 billion dollars from the Troubled Asset Recovery Program into the company,in exchange for warrants and preferred stock.As well,AmEx has gotten backing for 5.5 billion in corporate bonds from the Federal Deposit Insurance Corporation.It can also borrow at 0.5% from the Federal Reserve's discount window.The financial crisis has hurt AmEx's ability to raise money in the capital markets,and drove it to become a bank holding company along with Goldman Sachs,Morgan Stanley and other financial firms.

Shop Talk Update

It now looks as though Congress will adjourn without reaching agreement on an auto industry rescue.It will be up to the White House to provide aid through the Treasury Department's Troubled Asset Recovery Program,the 700 billion dollars already appropriated for the financial industry.If need be,Congress will reconvene before January 20 to deal with emergencies.Have an informative weekend.