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Not so Big Oil !! - Prices Fall - Banks Suffer - Useless predictions

Tumbling oil prices are dimming one of the few big bright spots that banks have enjoyed since the financial crisis.
Banks have been lending hand over fist to companies in the nation's energy industry, underwriting bonds, advising on mergers, even financing the building of homes for oil workers. All of this has provided a boon to banks that have been struggling to find more companies and consumers wanting to borrow.
Yet with the price of crude oil falling below levels sufficient for some energy companies to service their huge debts, strains are being felt and defaults are likely. While it may take some time for the crunch in the oil industry to translate into losses, one thing already seems clear: The energy banking boom is over.
Pedestrians pass in front of a Wells Fargo & Co. bank branch in New York
Scott Eelis | Bloomberg | Getty Images
Pedestrians pass in front of a Wells Fargo & Co. bank branch in New York
"At the least, you are talking about a slowdown in loan growth for the banks in the energy-producing states," said Charles Peabody, a banking specialist at Portales Partners. "That, we feel pretty strongly about."
Mr. Peabody covered Texas banks in the 1980s, when a slump in the energy business helped cause large losses at the lenders, and banks to collapse or be rescued. He says he expects the current problems for energy companies to lead to losses, too.
"We do believe that you will start to see some defaults," he said.
This week, as many of the largest banks report their earnings for the final three months of 2014, investors will press the banks for answers on how a sudden slump in the once-roaring oil and gas industry may hurt their bottom lines.
The expected slowdown comes as banks, both big and small, have finally dug out from the wreckage of the financial crisis and have been looking for new ways to bolster their revenues.
http://www.cnbc.com/id/102328548

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