ETF Trends
ETF Trends

The deluge of foreclosures that could have ruined our banking and home-financing industry is starting to abate as hopeful signs indicate improvement in the U.S. financial system and its exchange traded funds (ETFs).

Dirt-cheap interest rates, frugality and returning growth are helping the banking sector’s balance sheets, writes Daniel Gross for Yahoo! Finance. [How Financial ETFs May Benefit As Banks Get Safer.]

Through the second week of October, only 41 large U.S. companies have defaulted on debt,  compared to 158 in the same period for 2009. J.P. Morgan (NYSE: JPM) reported delinquency rates and money needed to deal with bad debt has dropped. Additionally, the Federal Deposit Insurance Corporation recently gone one whole week without closing a failed bank.

It’s not over yet, though. So far this year, 129 banks have failed, but these banks where only smaller banks, with an average $560 million in assets. There are still 829 institutions with $403 billion in assets that the FDIC considers to be “problem institutions.” [One ETF to Play Financial Reform.]

To the ire of many, this new health means bonuses are back, too. The Wall Street Journal found that 26 of 35 financial companies on the NYSE have increased compensations, with big companies preparing to pay out a record $144 billion, or 4% more than in 2009, according to News Live. Companies have argued that the payouts are justified to keep their talented employees.

For more information on the banking sector, visit our financial category. These three ETFs are hovering right around both their long- and short-term trend lines, and most financial ETFs are below their 2007 highs by 40% or more. So you don’t miss a trading opportunity when it happens, sign up for our alerts.

  • iShares Financial Services (NYSEArca: IYG)
  • SPDR KBW Bank (NYSEArca: KBE)
  • Financial Select Sector SPDR (NYSEArca: XLF)

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.