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To: Crossy who wrote (93465)	8/25/2010 3:07:36 PM
From: Keith Feral	Read Replies (1) \| Respond to of 118717

prefblog.com You are right about the interest expense from TRUPs getting prepaid. I guess there is another group of preferreds come out after tax. Banks are still paying out 8% yields on their TRUPs given the discount to $25 par. Otherwise the yield would be more like 6%. No reason to borrow at 8% or 6% to lend at 4%. It's good to see the distinction between the TRUPs and the other preferreds. Hate to see them all go away. But, the TRUPs can be called away early without penalty. That provides an easy excuse to get rid of those at their earliest convenience. I just wonder to what extent the market is trying to sniff around for some secondaries from these banks. JPM and C have Tier 1 common ratios close to 10%, so they should be fine with a $20 billion recall. BAC has an 8% Tier 1 common ratio that will probably be closer to 9% this quarter after the gain from CCB. They also have another $10 billion worth of BLK which would enable them to get to 10%. That would put them in the clear. I have no idea what WFC would do since their capital ratio is around 7.5% with no visible assets to raise capital. My guess is that if 1 of the 4 big banks ever got tagged for a capital raise, WFC is the most vulnerable. But, no one really seems to care what Buffett does, so WFC would probably sit back and wait another year to grow their capital to sufficient levels to take the $20 billion recall. It still makes no sense that WFC is trading at the highest premium. The one thing they have going for them is that they have the highest net interest margin. But, that will get cut in half by assets earning lower spreads next year. WFC still looks like a good buy anytime it get down to $21.