CHICAGO, Sept. 22, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Citigroup Inc. (NYSE:C-Free Report), Bank of America Corp. (NYSE:BAC-Free Report), Goldman Sachs Group Inc. (NYSE:GS-Free Report), Morgan Stanley (NYSE:MS-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday's Analyst Blog:
Bank Stock Roundup
While pre-crisis mortgage issues prevailed, active restructuring activities and the 2014 Mid-Cycle Stress Test results were more prominent in the last five trading days. Citigroup Inc. (NYSE:C-Free Report) was in the limelight for its restructuring activities.
Further, optimism surrounded the industry as mid-cycle stress test results projected banks' ability to cope with the most adverse economic scenarios.
On the other hand, the recent lawsuit related to the fraudulent sale of inferior mortgage bonds to Virginia Retirement Fund between 2004 and 2010 has increased legal hassles for banks. Nevertheless, the law-enforcement agencies are trying to resolve such issues in order to avoid lengthy litigations.
(Read last week's developments: Bank Stock Round up for Sep 12, 2014)
Recap of the Week's Most Important Developments:
1. Issues pertaining to the pre-crisis business conducts continue to trouble major global banks. Units of Citigroup, Bank of America Corp. (NYSE:BAC-Free Report), The Goldman Sachs Group Inc. (NYSE:GS-Free Report), Morgan Stanley (NYSE:MS-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report) were among the 13 banks sued by the state of Virginia. The complaint accused these banks of selling inferior mortgage bonds fraudulently to the state's retirement fund between 2004 and 2010. The lawsuit was filed in January under the provisions of the Virginia Fraud Against Taxpayers Act by Texas-based financial modeling and analysis firm – Integra REC LLC, and was later joined by the state of Virginia. (Read more: 13 Major Global Banks Sued by Virginia for $1.15B)
2. In compliance with the regulations, Citigroup and several other Wall Street banking giants have released 2014 Mid-Cycle Stress Test results, projecting their ability to cope with the most adverse economic scenarios. Covered Companies rule, which has been issued by the Board of Governors of the Federal Reserve System (Federal Reserve), applies to large bank holding companies (BHCs). The rule has been issued for implementation of stress testing and disclosure requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFAST). As described in the rule, a stress test is "a process to assess the potential impact of scenarios on the consolidated earnings, losses, and capital of a company over the planning horizon, taking into account its current condition, risks, exposures, strategies and activities."
Based on banks' own models and assumptions about probable stressed scenarios, the banks conduct the test. However, the tests reflect banks' views on their economic well-being and the associated risks that could impact their financial outlook. The latest stress test follows the Federal Reserve's stress test round for 30 BHCs released in Mar 2014. (Read more: Citigroup Discloses 2014 Midyear Stress Test Results)
3. Citigroup and BofA will offer mortgage loans at a discounted rate to borrowers with blemished credit histories or low incomes. These two Wall Street majors, in association with the Neighborhood Assistance Corporation of America (NACA), will assist struggling borrowers through a new loan program. Under this arrangement, Citigroup and BofA will offer discounts higher than what banks usually offer to flawless borrowers capable of making larger down payments. Notably, discounts are offered in a mortgage loan in case a borrower pays 'mortgage points' in the form of upfront fees. If a borrower pays a mortgage point (which is equal to 1% of the total loan amount taken), he/she gets a discount of 0.25% in the mortgage interest rate. However, under this new loan assistance program, Citigroup and BofA will offer a 0.5% discount for a single mortgage point. (Read more: Citi, BofA Plan Discount Mortgages for Tainted Borrowers)
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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