Speaking at the Securities Industry and Financial Markets Association's Summit on the Troubled Asset Relief Program Monday morning, Gerard Cassidy, managing director of Bank Equity Research at RBC Capital Markets, talked about the ways TARP will affect M&A in the banking industry.
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"TARP is going to slow down M&A," said Cassidy. "If you're troubled and you get TARP money, you'll be under less pressure to sell out.
"The global financial crisis was driven by the decline of the housing bubble in the U.S., but it's the credit cycle that's becoming a much bigger program for Comerica banks and will remain so over the next 12 to 18 months," he added. "The leveraged loans and the commercial building loans are the next shoes to drop for the commercial banking industry; they're going to want to deal with these as quickly as possible since they have TARP to bolster them.
"We're going to see some dramatic write-downs at the end of this year," he continued, "because now the banks have TARP and will want to put this problem behind them as quickly as possible." - George White
