This Is It Fsx
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Transcript of This Is It Fsx
FSX – DALLAS JANUARY 25, 2012
Patrick Hines Principal
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WHAT HAPPENED?
WHERE ARE WE ?
MOVING FORWARD…
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GROWTH OF ECONOMY FUELED BY BANK LOANS
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LENDING STANDARDS TAKEN OFF
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LENDING TOOK OFF !
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• Lorem ipsum geht heirBANKS LENT – WE SPENT
UNTIL WE RAN OUT OF CASH
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THE GREAT RECESSION No liquidity Inability to repay debt
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BANKING DISAPEARED
BECAME PAPER MILLS
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AND… YOUR FRIENDLY BANK ?
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Banks Brokerages Relationship Driven Transaction Driven
Separated by Glass Steagall
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GOBBLED UP
Number of Banks Fall !
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Old” Bank Balance Sheet
CASH
Other Assets
Loans
DEPOSITS
DEBT
Capital
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“SECURITZATION”
BANKS SELL LOANS
CREATE OFF BOOK
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• CDO – collateralized debt obligation • CMO - collateralized mortgage obligation • Synthetic CDO – (see above)• CBO – collateralized bond obligation • CIO - collateralized insurance obligation • Structured Finance
– asset backed securities
OFF BOOK…
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DEPOSITS
Loans
OFF BOOK
• CASH
Capital (Net Worth)
DEBT
“New” Bank Balance Sheet
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PAPER
MORTGAGE PAPER
CASH
$
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THE NEW BANKERS
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YOUNG - ATTRACTIVE
TRANSACTION DRIVEN
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CREATE PAPER
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•
THAT THEY SELL
TO WALL STREET
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TRULY A PONZI
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Banks combine with brokers Become transaction or fee driven Relationship banking dies
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THE BANKARAGES
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Institution Name
Weiss Rating Weiss Rating Definition
S&P Rating
Bank of America
D Weak A-
Bank of New York Mellon
C Fair AA-
BNY Mellon NA B- Good AA-
Citibank NA C Fair A-
HSBC Bank USA NA
C Fair AA-
JPMorgan Chase Bank NA
D Weak A+
Wells Fargo Bank NA
D Weak AA-
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THE RESULT ?
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Access to bankCapital limited
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HOW CAN WE MOVE FORWARD ?
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Lessons from history
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The Great Depression
DEPTH IN ‘32
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NATIONAL INTEREST WAS UNIFIED
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SAVINGS GREW 300%
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INCREASED ECONOMY’S CASH CAPITAL LIQUIDITY
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LENDING AND INVESTMENT
INCREASED
`
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TAKE CONTROL
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BOTTOM LINE THE MANY GREAT IDEAS IN THIS ROOM
LACK ACCESS TO BANK CAPITAL
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THE OPPORTUNITY IS IN THIS ROOM
TO GENERATE RETURN
CREATE VALUE
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FED COMPRESSINIG INTEREST RATES
TRYING TO MANAGE THE ECONOMY
IT IS A NEW WORLD
U.S. Treasury Yields 1 Year 0.02% 2 Year 0.11% 5 Year 0.84% 10 Year 1.96% 30 Year 3.03%
THE BANK ENVIORNMENT
• Standard CD Rates if you Open Online• Minimum Deposit $2,500• 3months 0.05%• 6months 0.05% • 1year 0.05%
• So $100,000 x 0.05% = $5,000 pre tax…
S&P FOR 2011
VOLITILTY
MUNICIPAL BOND RATES
Maturity Yield Yesterday Last Week Last Month
2yr AA 0.61 0.64 0.67 0.69
2yr AAA 0.53 0.57 0.73 0.54
2yr A 0.94 0.94 1.12 1.10
5yr AAA 0.87 0.97 0.96 1.06
5yr AA 1.05 1.08 1.07 1.23
5yr A 1.68 1.40 1.66 1.74
10yr AAA 1.87 1.68 1.87 2.06
10yr AA 2.07 2.10 1.81 2.03
10yr A 2.18 2.40 2.17 2.63
20yr AAA 2.89 3.11 4.30 3.24
20yr AA 4.60 3.78 4.84 4.12
20yr A 4.03 3.87 4.41 4.48
CORPORATE BOND RATES
Maturity Yield Yesterday Last Week Last Month
2yr AA 0.96 0.97 0.82 1.06
2yr A 1.73 1.69 1.23 1.47
5yr AAA 1.69 1.76 1.55 1.62
5yr AA 2.17 2.06 2.01 2.16
5yr A 2.16 2.23 2.26 2.90
10yr AAA 2.29 2.14 2.10 2.36
10yr AA 3.67 3.59 3.58 3.53
10yr A 3.36 3.21 3.17 3.44
20yr AAA 4.86 4.89 4.34 4.50
20yr AA 5.31 5.34 5.15 3.84
20yr A 5.03 5.05 4.51 4.67
Data pro
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Compressed rates create opportunity for capital
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Clawing back
WHERE ARE WE NOW ?
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YOU MUST CREATE A PLAN
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Personal & Business Financial Security Analysis Tax ManagementInvestment Strategy FormulationEstate Tax Reduction and ControlRetirement Planning
To take advantage you must plan
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We did it before
We are doing it again
PAT HINES