Financial Biz Review: Big Banks Feel PRESSURE, First Horizon May Have to REPURCHASE Mortgages

The new Fed rule pertaining to increased capital requirements is pressuring big banks to divest assets. Bloomberg data indicate that lending by JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) fell 4.9 percent year-to-year to $3.04 trillion in the first quarter, but loans at the 17 smallest firms in the KBW Bank Index rose 9.8 percent to $1.27 trillion. Separately, the recent drop in JPMorgan shares has led Goldman Sachs to add the company to its Conviction Buy list, pointing out near term earnings, returns visibility and a favorable risk/reward. Further, JPM is forecast to earn $5.32 per share next year, says Eddy Elfenbein, which means that earnings per share could be higher in 2013 than it was in 2006 and 2007 when the stock traded for more than $53.

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First Horizon (NYSE:FHN) shares jump on the news that it will take a $272 million charge for bad mortgages that it might be required to repurchase from Fannie and Freddie. This might not be technically called good news, but it does remove some uncertainty from the situation, and in reaction Morgan Stanley upgrades the shares to Overweight.

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