A report by Reuters news service says Regions Financial Corp. CEO Dowd Ritter is open to “any and all” possibilities to raise capital in order to repay the U.S. goverment for the bailout money it loaned the institution. Regions, based in Birmingham, Ala., received $3.5 million in Troubled Asset Relief Program (TARP) funds. However, despite this pledge, it is unclear that Region’s brokerage arm, Morgan Keegan, is on the table.
The Reuter’s piece says that despite the pledge, Ritter “dismissed the idea” of unloading Morgan Keegan. The bank suffered when its investment arm, headquartered in Memphis, Tenn., was the target of numerous lawsuits claiming misrepresentation of funds. Thousands of investors sued Regions Morgan Keegan, claiming certain investment funds were represented as low risk, when they were in fact tied to the high-risk mortgage bond market. When the bottom fell out of the housing market, many investors – which include individuals as well as companies and organizations – lost the majority of their money almost overnight.
A similar report in the Wall Street Journal says Ritter is open to “finding a partner for brokerage subsidiary Morgan Keegan & Co.” The question was posed during the recent Goldman Sachs & Co. U.S. Financial Services Conference in New York. According to the WSJ, while Ritter emphasized that he still feels Morgan Keegan is of “strategic importance” to Regions, he also vowed to stay open to any possibilities, and suggested a joint-venture for the brokerage would be appealing.
Arbitration of pending lawsuits against Regions Morgan Keegan is being handled by the Financial Industry Regulatory Authority (FINRA), and most settlements to date have gone in favor of the Plaintiffs. There are many lawsuits still currently pending.