The Government’s Mortgage Modification Program May Hurt The Bottom Line Of The Banks In The Financial ETF
“Citigroup (NYSE: C) announced on Thursday that it would join the government’s program to modify second mortgages, following Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), JP Morgan Chase & Co (NYSE: JPM) and others, as the housing market appears to be at the beginning of a second downturn,” American Banking News Reports.
They go on to say, “The Obama administration’s second mortgage modification program hopes to modify $75 billion worth of loans aiming at reducing monthly mortgage payments of distressed homeowners to help customers stay in their homes and avoid foreclosures.”
“Many believe that the housing market is at the beginning of a second down turn as home sales numbers are beginning to fall and as foreclosure rates are rising. The Federal Reserve is also planning on ending its support of the real estate market next week by terminating a program that has helped keep mortgage interest rates down. Some believe mortgage rates could rise by as much as 1% during the next several months. The administration’s plan is to hope to eliminate the hurdle of second mortgages for some cash-strapped borrowers by offering lender incentives to lower payments or to eliminate the loans entirely,” American Banking News Reports.
A modification program like the administration has planned may put serious pressure on financial ETFs. It will be just a matter of time when all institutions take part in the effort. The program may accelerate losses in the banking sector creating problems for the banks bottom line. Investors should proceed with caution in banks including the popular Financial Select Sector SPDR ETF (XLF) which has enjoyed double digit gains since the March lows.
Here are some details we highlighted on the Financial Select Sector SPDR ETF (XLF) including the holdings within the ETF below:
The Financial Select Sector SPDR® Fund (XLF), before expenses, seeks to closely match the returns and characteristics of the Financial Select Sector Index (ticker: IXM). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
| Fund Name: | Financial Select Sector SPDR Fund | |||
| Ticker Symbol: | XLF | |||
| Holdings: | As Of 03/26/2010 | |||
| Name | Weight | Ticker | Sector | Shares Held |
| Bank Of America Corporation | 10.26 | (BAC) | Financials | 41974690 |
| Jpmorgan Chase & Co | 10.22 | (JPM) | Financials | 16620062 |
| Wells Fargo & Co New | 9.24 | (WFC) | Financials | 21674432 |
| Berkshire Hathaway Inc Del | 7.69 | (BRK.B) | Financials | 6925539 |
| Goldman Sachs Group Inc | 5.2 | (GS) | Financials | 2201397 |
| Citigroup Inc | 4.84 | (C) | Financials | 82216880 |
| Us Bancorp Del | 2.85 | (USB) | Financials | 8007122 |
| American Express Co | 2.81 | (AXP) | Financials | 5007862 |
| Morgan Stanley | 2.3 | (MS) | Financials | 5847245 |
| Bank Of New York Mellon Cor | 2.13 | (BK) | Financials | 5056072 |
| Metlife Inc | 1.98 | (MET) | Financials | 3428167 |
| Pnc Finl Svcs Group Inc | 1.76 | (PNC) | Financials | 2163852 |
| Travelers Companies Inc | 1.6 | (TRV) | Financials | 2152471 |
| Prudential Finl Inc | 1.57 | (PRU) | Financials | 1945945 |
| Aflac Inc | 1.43 | (AFL) | Financials | 1963369 |
| Simon Ppty Group Inc New | 1.41 | (SPG) | Financials | 1213307 |
| State Str Corp | 1.31 | (STT) | Financials | 2073402 |
| Bb&T Corp | 1.27 | (BBT) | Financials | 2890164 |
| Cme Group Inc | 1.2 | (CME) | Financials | 278688 |
| Capital One Finl Corp | 1.09 | (COF) | Financials | 1897853 |
| Schwab Charles Corp New | 1.05 | (SCHW) | Financials | 4088650 |
| Allstate Corp | 0.99 | (ALL) | Financials | 2245328 |
| Chubb Corp | 0.98 | (CB) | Financials | 1376178 |
| Franklin Res Inc | 0.94 | (BEN) | Financials | 621066 |
| Price T Rowe Group Inc | 0.82 | (TROW) | Financials | 1083365 |
| Northern Tr Corp | 0.76 | (NTRS) | Financials | 1011618 |
| Suntrust Bks Inc | 0.76 | (STI) | Financials | 2089570 |
| Loews Corp | 0.76 | (L) | Financials | 1485379 |
| Marsh & Mclennan Cos Inc | 0.75 | (MMC) | Financials | 2227016 |
| Progressive Corp Ohio | 0.74 | (PGR) | Financials | 2810538 |
| Public Storage | 0.71 | (PSA) | Financials | 567654 |
| Vornado Rlty Tr | 0.69 | (VNO) | Financials | 659624 |
| Aon Corp | 0.65 | (AON) | Financials | 1117444 |
| Ameriprise Finl Inc | 0.64 | (AMP) | Financials | 1069261 |
| Equity Residential | 0.63 | (EQR) | Financials | 1179133 |
| Hartford Finl Svcs Group In | 0.61 | (HIG) | Financials | 1607618 |
| Boston Properties Inc | 0.61 | (BXP) | Financials | 581816 |
| Fifth Third Bancorp | 0.6 | (FITB) | Financials | 3327508 |
| Hcp Inc | 0.56 | (HCP) | Financials | 1229478 |
| Host Hotels & Resorts Inc | 0.54 | (HST) | Financials | 2731360 |
| Principal Finl Group Inc | 0.53 | (PFG) | Financials | 1336822 |
| Regions Financial Corp New | 0.52 | (RF) | Financials | 4991093 |
| Invesco Ltd | 0.52 | (IVZ) | Financials | 1794298 |
| Lincoln Natl Corp Ind | 0.51 | (LNC) | Financials | 1264802 |
| Genworth Finl Inc | 0.49 | (GNW) | Financials | 2046928 |
| Discover Finl Svcs | 0.48 | (DFS) | Financials | 2275152 |
| Unum Group | 0.47 | (UNM) | Financials | 1390987 |
| Intercontinentalexchange In | 0.47 | (ICE) | Financials | 308264 |
| Nyse Euronext | 0.43 | (NYX) | Financials | 1092003 |
| Ventas Inc | 0.43 | (VTR) | Financials | 655942 |
| Avalonbay Cmntys Inc | 0.41 | (AVB) | Financials | 341012 |
| Keycorp New | 0.39 | (KEY) | Financials | 3675122 |
| M & T Bk Corp | 0.38 | (MTB) | Financials | 347657 |
| Hudson City Bancorp | 0.38 | (HCBK) | Financials | 1983127 |
| Prologis | 0.38 | (PLD) | Financials | 1984502 |
| Comerica Inc | 0.37 | (CMA) | Financials | 728572 |
| Kimco Realty Corp | 0.37 | (KIM) | Financials | 1694067 |
| Xl Cap Ltd | 0.37 | (XL) | Financials | 1431906 |
| Plum Creek Timber Co Inc | 0.36 | (PCL) | Financials | 681141 |
| Slm Corp | 0.34 | (SLM) | Financials | 2002128 |
| Moodys Corp | 0.34 | (MCO) | Financials | 822762 |
| Peoples United Financial In | 0.33 | (PBCT) | Financials | 1554176 |
| Health Care Reit Inc | 0.33 | (HCN) | Financials | 518932 |
| Legg Mason Inc | 0.27 | (LM) | Financials | 680253 |
| Leucadia Natl Corp | 0.27 | (LUK) | Financials | 794180 |
| Cincinnati Finl Corp | 0.27 | (CINF) | Financials | 682104 |
| American Intl Group Inc | 0.26 | (AIG) | Financials | 564837 |
| State Str Instl Liquid Resvs | 0.26 | (85749P9A) | Unassigned | 18815524 |
| Torchmark Corp | 0.25 | (TMK) | Financials | 346768 |
| Marshall & Ilsley Corp New | 0.24 | (MI) | Financials | 2203892 |
| Cb Richard Ellis Group Inc | 0.23 | (CBG) | Financials | 1131414 |
| Assurant Inc | 0.23 | (AIZ) | Financials | 487435 |
| Huntington Bancshares Inc | 0.22 | (HBAN) | Financials | 2998091 |
| Zions Bancorporation | 0.19 | (ZION) | Financials | 628405 |
| First Horizon Natl Corp | 0.18 | (FHN) | Financials | 942621 |
| Nasdaq Omx Group Inc | 0.18 | (NDAQ) | Financials | 619531 |
| Janus Cap Group Inc | 0.15 | (JNS) | Financials | 767549 |
| E Trade Financial Corp | 0.14 | (ETFC) | Financials | 6535443 |
| Federated Invs Inc Pa | 0.13 | (FII) | Financials | 371885 |
| Apartment Invt & Mgmt Co | 0.13 | (AIV) | Financials | 490474 |
| U.S. Dollar | -0.21 | (CASH_USD) | Unassigned | -1.5E+07 |
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- Senator Dodd’s Newly Proposed Bill Will Hurt Financial ETFs
- Spread Your Wealth Throughout Many Banks With This Financial ETF
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