The big surprise with the bank bailouts is that we got so much money back so soon. The banks recoiled from the stigma of Troubled Asset Relief Program (TARP) and the first eight TARP recipients paid back a combined $140 billion plus dividends and warrant proceeds. The first eight bailed out banks were Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), Morgan Stanley (MS), State Street (STT), and Bank of New York Mellon (BK).

While these banks looked better than their smaller rivals with respect to some risked based Basel capital metrics, they lagged by over four percent behind their smaller rivals in simpler leverage ratios based on total bank assets. These big banks had 40-to-1 leverage using the tangible common equity (TCE) to total assets leverage ratio at the end of 2008.

Eoin Treacy's view This report highlights the difference between the US and European banking sectors. The USA may have been the epicentre of global risk in 2007 and 2008 and has its own problems today, but aggressive moves have been taken to shore up bank balance sheets using every means available. An increasing number have seen their fortunes improve to such an extent that they have been able to repay their debt to government.

Arguably, Europe is currently where the greatest perception of risk lies and the performance of the region's banks illustrate this. Whereas the USA's financial sector is exiting TARP, it looks increasingly likely that parts of the European banking sector will be in need of a similar systemic bailout as the full extent of the who owns what liabilities becomes clearer.

The DJ Euro Stoxx Banks Index has sustained a progression of lower rally highs since October 2009 and broke to new reaction lows on Friday. A clear upward dynamic sustained for more than a day or two is needed to begin to question supply dominance while a rally back above 200 would be required to indicate demand has regained the upper hand.

By contrast the S&P500 Banks Index has pulled back from its high near 160 to test the upper side of the previous range and the 200-day moving average. Here also the bears have control for at least the short-term but the two chart patterns are clearly different. Nevertheless the S&P Banks Index would need to sustain a rally back above 145 to indicate demand has returned to dominance in the current area.

The KBW Regional Banks Index, having been an outperformer, has also pulled back to test the 200-day moving average and the upper side of the previous range. A sustained move back above 52.50 is needed to break the short-term progression of lower rally highs and indicate a return to demand dominance.

Much has been made of the 'safe haven' status of Treasuries, the US Dollar, the Yen and gold. However, Wall Street is a less high profile relative beneficiary of anxiety focused outside the USA. Since just about every other stock market is high-beta compared to the USA, Wall Street is coming through the current crisis in a comparatively favourable position.

This Chart Library Performance Filter of global stock market indices rebased to the US Dollar highlights the relative performance of the S&P500, Dow Jones Industrials and particularly the Nasdaq-100 against other large cap markets.

Here are instructions on how to create this filter yourself:
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In fact they are just about the best performing large cap indices in the world this year, helped by the relative strength of the US Dollar over the same timeframe. In absolute terms, the performance is not as impressive. The strength of the US Dollar may offer a headwind for US exporters if it is sustained over the medium-term, but in the short term the safe haven status of the USA will probably outweigh this consideration.