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Impact of Obama Plan on Prospect of Big-Bank Breakups

Jun 19, 2009 - 12:20 PM EDT

Research Recap submits:

CreditSights believes that the prospect of the breakup of big banks such as Citigroup (NYSE: C) is receding in the light of the Obama Administration’s proposed regulatory changes. However, Standard & Poor’s still sees this as a real possibility, according to CreditSights’ interpretation of an S&P conference call on its recent downgrading of many retail banks.

In contrast to our view that the Obama proposal reaffirms the position of large banks, S&P seemed more cautious and stated that it did not know how regulators would look at systemic risks. The agency seemed to believe that there could still be a real possibility for big bank break-up scenarios, whereas we feel that this risk is receding.

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Source: Seeking Alpha (Jun 19, 2009 - 12:20 PM EDT)