Zero Hedge has always been fascinated by the behemoths of securities lending (or not so much lately) State Street and Bank Of New York: these firms, which allegedly had just marginal toxic exposure, were in the front lines for the TARP bailout and have traditionally been handled with velvet gloves by the administration. In fact, many would say the custodian firms are in a league of importance much higher than even Goldman or JP Morgan as with their repo activity, security lending and cash collateral reinvestment, they are the de facto center of the shadow banking system.
State Street (STT) stock tumbled 33% in premarket trading (last at $24/share). The world's largest money manager for institutions said 2009 profit will be little changed from last year after Q4 earnings fell 71%. What is curious is that according to Bloomberg out of the 18 analysts who cover the stock, 9 have a buy rating, 9 have a hold and 0 are at sell...yup, good to see sell-side research ahead of the ball on this one too.