Barclays says they expect investors attention to turn towards Washington, where, a new financial rescue plan is well in the works, with some sort of official announcement expected in the near-term.
They expect a multi-prong approach including some or all of: asset guarantees; an aggregator bank; additional capital injections, while avoiding nationalizations; and foreclosure mitigation tactics. To the extent the plan dispels any concerns regarding nationalization BAC and C could be beneficiaries.
With respect to the 'Aggregator Bank', those that have taken the largest write-downs could be the biggest beneficiaries. While C and BAC come to mind, it's unclear how their participation in the asset guarantee program influences this. Still, they note C's ABS CDO were not covered. ZION is another name that could benefit.
To extent these programs restore liquidity to the marketplace, thus reducing unrealized losses positions on AFS securities, the firm believes STT, followed by PNC, BK and USB could be helped relatively more.
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