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An Encouraging Sign At The Banks

The very high wattage of the Obama inauguration this week has relegated what would otherwise be a high profile news event to the back pages of media attention. Bank stocks have plummeted during the past week to levels that raise concerns about the viability of a private banking system in this country. This is an historic issue because it reaches all the way back to President Andrew Jackson's assault on a nationalized bank system.

Share prices of Citi Group, Bank of America, Wells Fargo, State Street Bank and lesser known regional banks have imploded. The stock market's drop yesterday had nothing to do with the inauguration of President Obama but rather was the result of investor concern that no banks would survive the current crisis.

Fortunately, some well known bank executives have put their money where their mouth is:

Jan. 21 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by assets, said Chief Executive Officer Jamie Dimon bought $11.5 million of stock last week after it plunged about 27 percent in the first 10 trading days of the year. The shares surged 25 percent today.

Dimon, 52, purchased 500,000 shares in the New York-based lender for $22.93 apiece on Jan. 16, according to a regulatory filing. Heidi Miller, CEO of the treasury and securities services unit, bought $80,802 in stock the same day.

The two executives join those at larger rival Bank of America Corp. in buying shares of their companies. Bank of America CEO Kenneth Lewis and five directors bought more than 500,000 shares in the Charlotte, North Carolina-based company yesterday, according to a filing.

Purchases by insiders are often viewed as a vote of confidence. JPMorgan rose to $22.63 in New York trading today. Bank of America, the biggest U.S. lender by assets, climbed 31 percent. It's dropped 81 percent in the past 12 months, while JPMorgan has fallen 43 percent in the same period.

It is an accepted rule in investing that insiders will sell stock for a variety of reasons (estate planning, pay for a child's education or pay debts) but they buy stock for only one reason: they think it's cheap. That the executives of some this country's largest banks are actually coming out of pocket to buy their own stocks may be a harbinger that the beginning of the end to this financial mess is within sight.


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Comments (10)

While I may tend to agree w... (Below threshold)

While I may tend to agree with you that the light at the end of the tunnel may be showing. Do you have any idea if these insider genius' sold stock before it turned to sh!t? If they sold before it got run over by a tank and are now buying it back or reestablishing longs after liquidating prior holdings then I would tend to agree more that they might know a little more than the rest of us that the end is closer than it appears. mpw

mpw280 You can use... (Below threshold)


You can use this link to study all insider transactions:


Enter the symbol for each company to see all insider transactions. The purchases I referenced in my post are not reflected because I found the info on Bloomberg.

The link above is an easy to use resource for finding out the stock trading of public company executives.

If the government will show... (Below threshold)

If the government will show some restraint, we may hit bottom soon.

A friend who has an account... (Below threshold)

A friend who has an account at Bank of America was going to close it for fear she would lose her money. I told her to leave it alone. That's all we need -- another run on the banks. Settle down, everybody! The dust will clear eventually and then all will be well again.

I still think President Bus... (Below threshold)

I still think President Bush should have been given another four years as President. After all, he led us into this mess, and I'm damn sure he could have led us out of it. With more tax cuts for the ultra rich, hell the economy would have gain more jobs than the losses, right?

I still think President ... (Below threshold)
James Cloninger:

I still think President Bush should have been given another four years as President.

Yeah, wasn't he supposed to be crowning himself King of the United States, and sending all his detractors to camps/prisons?

Oh, yeah, and of course pardoning all his buddies...all, what, two of them?

Peter Schiff.Ron Pau... (Below threshold)

Peter Schiff.
Ron Paul's campaign financial advisor.
Predicted the crash in June 2007.
Accused of "anti-Americanism" by the neocons.

He's not anti American (RPa... (Below threshold)

He's not anti American (RPaul), just naive to realities of the world outside the US.

Good lord, you have got to ... (Below threshold)
dan in michigan:

Good lord, you have got to be kidding me. Ken Lewis at BAC bought countrywide (disaster) then Merrill Lynch (disaster)and you think his buying a paltry one million of stock is a good sign?

Keep dreaming, this show is... (Below threshold)

Keep dreaming, this show is just getting started.






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