TARP Bank Shares Dwarf Decline in S&P 500: Chart of the Day
By Ari Levy
Jan. 27 (Bloomberg) -- Since the U.S. Treasury began investing in banks through its Capital Purchase Program, a gauge of participating companies’ share prices has lost four times as much as the Standard & Poor’s 500 Index.
The CHART OF THE DAY shows that an index of 201 publicly traded companies to receive funding in the plan, part of the Troubled Asset Relief Program, has plunged 45 percent since Oct. 28, compared with an 11 percent decline in the S&P 500. The 81- company S&P 500 financials group has dropped 41 percent. The TARP index is weighted by the amount each company took.
“I don’t think anyone behind the TARP plan thought this would be a get-rich-quick scheme,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago, which oversees $55 billion. “The jury is still out on this stuff.”
Citigroup Inc. and Bank of America Corp., which make up a combined 13 percent of the TARP index, have been the biggest drags on the Treasury’s investment, each dropping more than 70 percent. The companies reported fourth-quarter net losses of $8.29 billion and $1.79 billion, respectively, because of soured mortgages and related securities. Only 15 members have gained, led by Morgan Stanley, which climbed 26 percent.
The six biggest lenders in the index make up 57 percent of the group’s value. They’ve dropped an average of 39 percent since Oct. 28.
To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net.
Last Updated: January 27, 2009 00:27 EST
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