People, I think, are still fearing that TARP's a big loser; a sinkhole. But the government is getting big payments with bank warrant buybacks. Maybe the reason people struggle with TARP still is WFC, C and BAC. Until they pay their money back, I think people fear that this program will still be a huge loser. AIG is different and more bullish after this morning that some of that lost money will come back.
I don't know about Wells Fargo. It is scorned, no one believes in them (judging by the multiple), it has some brokered mortgages but not many, and it has a great fee business. I think the money will come back after the first quarter of 2010. Same with Bank of America, which is I think is coining money. I think Ken Lewis will pay back TARP when the last quarter of the year is reported and then he'll turn over the reins to Brian Moynihan, the new head of consumer banking.
But it is Citigroup that's the repository of the big government win. The government's up $5 billion right now, and Citigroup could be the big profit that the government gets that wipes out any losses to TARP -- very, very meaningful.
When that stock is free to trade on Sept. 10, the government can start dribbling, with the huge amount of trading, and it wouldn't be a problem. If I were the government I would be a scale seller.
I just can't stress how important it is that the government's now in the black on its holdings.
And I also have to tell you that with this employment number, those who are modeling extreme stress tests and can make a case that the downside can actually be taken off the table.
Citigroup's being put away by big-time managers. They view it as a F at $4 or a BAC at $3. I believe there are many managers trying to get 5% positions in the thing.......