Bank Buyers Waiting for Better Economy

Investor's Business Daily (08/11/08) P. A1; Krause, Reinhardt
Lenders that are exposed to housing problems are expected to become merger targets once the economy and housing market show signs of bottoming out, say analysts. Midsize banks are perceived as the most likely targets; and there has been speculation about bigger players such as Wachovia, Washington Mutual, National City and SunTrust as well. For the time being, however, potential buyers remain skittish, largely out of concern about an accounting rule that would require them to record loans and other assets of distressed banks at fair market value; they would likely need to boost capital to cover marked-down asset prices on the balance sheet. Also, the federal government has come to the rescue of Fannie Mae and Freddie Mac, but there are questions about how it would respond to further financial crises.