Investors Snap Up New Bank Equity

Yikes, that didn’t take long. We knew last night that Wells and Morgan Stanley were moving ahead with bolstering their capital. They did so in spades today.

Wells had planned to issue $7.5 billion of stock and ended up selling $8.6 billion today. Morgan Stanley (MS) sold $4 billion of equity and raised another $4 billion of debt without government guarantees. I guess that pretty much ends any argument about how investors are looking at the sector.

No doubt that both of these guys want to de-TARP as quickly as possible. As I wrote earlier, they’re all paranoid about Goldman (GS) and JPMorgan (JPM) getting out in front of them.

I am still a little surprised by the reception their debt and equity offerings received. Two months ago the conventional wisdom was that the banks were going to be wards of the state for some time. Now it looks like they’ll be out from under the governments thumb with lightning speed. Was the conventional wisdom as usual wrong or are investors being foolish?

I don’t know. If you have thoughts feel free to leave them.

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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