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Bill Freehling is a business writer for The Free Lance-Star and Fredericksburg.com. This blog is on Fredericksburg-area business. Send an e-mail to Bill Freehling.

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Suddenly, hope is alive in battered banking community

THERE SEEMS to be a growing sense of optimism that banks will be able to "earn their way out" of the current economic crisis.

I’ve seen or heard the above-quoted material from numerous sources in the past week. Citigroup CEO Vikram Pandit said Tuesday that the troubled bank was profitable in the first two months of the year. The comments touched off a big stock rally.

Billionaire investor Warren Buffett, whose Berkshire Hathaway owns huge stakes in banks including U.S. Bancorp and Wells Fargo, had a similar message on CNBC Monday morning.

"The spreads are enormous on what they’re doing," Buffett said. "They’re getting the money at bargain rates."

That’s due to the Federal Reserve’s decision to keep the federal funds interest rate at near zero for the foreseeable future. Buffett said the main concern for bank shareholders is whether the government will force the institutions to sell shares at their current low price. He said banks that can avoid doing so should come out stronger than ever after the economy recovers.

Click here for this week’s full Business Browser column.

Permalink: http://news.fredericksburg.com/businessbrowser/2009/03/15/suddenly-hope-is-alive-in-battered-banking-community/

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