I previously discussed the CIT-One West transaction.
This post further explores the unintended subsidy benefits for a limited group
of regional banks flowing from banking regulations. There are perhaps a group
of 30+ regional banks who could obtain the net benefits from achieving Too Big To
Fail (TBTF) status. Basically, they obtain funding cost advantages that could
outweigh any regulatory burdens associated with becoming TBTF. This
synergy-subsidy allows them to out bid other bidders and still have a value
adding transaction. See the Attached
.
J
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