No matter how much opposed one might be to the RTC-like "bailout", I think that if it does go through, which in my opinion is now virtually guaranteed due to the upcoming elections, bank stocks would almost certainly benefit and go higher, especially given the fact that Bernanke envisions paying "above market" prices for most "toxic" assets...

"The Fed chairman said he favors buying the assets based on their "hold-to-maturity" value, which would require an estimate to be made of what each security will eventually be worth as payments come in over the years.

"If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits," Bernanke told the Senate Banking Committee. "First, banks will have a basis for valuing those assets and will not have to use fire-sale prices. Their capital will not be unreasonably marked down."

How will they determine the "true" hold to maturity value is beyond me, but this certainly sounds like a good deal to bank investors and could also generate significant asset management fees to the other financial services players like BLK, AZM, BX etc...

I still don't understand why would the preferred stock of clearly "too big to fail" institutions like C, GS, WFC and MS is still selling at such a huge discount to the par value? Look at the list at http://quantumonline.com/ScreenedTable.cfm. I believe this could be a temporary phenomenon driven predominately by liquidity, and thus very well could represent a continued buying opportunity...

P.S. It also means that US dollar's rally might be seriously overdone and interest rates should be heading higher...

Stay safe out there,
skepticalcapitalist@gmail.com