An Interesting Situation

http://www.futureofcapitalism.com/2010/08/an-interesting-situation

Carver Bancorp Inc., which, according to Yahoo! Finance has cash per share of $15.50, is trading today at below $5 a share. Granted it's a highly regulated industry (which is, along with the presence of some debt and the small size of the company, probably why fewer investors have pounced, and part of why I haven't bought any yet). But there aren't many places in capitalism where you can buy $15 for $5. The company's president and CEO, Deborah Wright, is a big deal and in certain ways a pillar of the New York establishment. The bank has a better reputation that a lot of others in the mostly immigrant and African-American communities it serves.

Deposit insurance is supposed to make banks more robust by making deposit money less flighty. But in a strange way it can also have the unintended consequence of making the equity part of a bank's capital structure less robust than it might otherwise be.

by Ira Stoll  |  Aug 25, 2010 at 10:50 am Related Topics:  Banking, Capital Markets Regulation, FDIC, New York receive the latest by email: subscribe to the free futureofcapitalism.com mailing list