First Citizens BancShares vs MP Materials: A Tale of 2 Regulation Bets

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Washington has spent the past year and a half writing checks to private companies, and the scoreboard on those investments has been rough. The quieter story—a lighter supervisory touch on banks—has barely made the front page.

Both are regulation stories. They point in opposite directions.

One side of the trade is an industry where the rulebook is getting shorter and competition is getting easier. The other is a company whose biggest new shareholder is the federal government, and whose stock has gone the wrong way ever since.

That split is the real investable idea right now, and it has almost nothing to do with the AI headlines dominating the tape.

Deregulation Builds Winners, Regulation Only Builds Survivors

Regulation creates survivability but never guarantees profits, per Joel Litman, chief investment strategist at Altimetry. Deregulation creates competition, and competition is where the best-performing stocks tend to come from.

Litman recently spent several hours with former Congressman Ron Paul in Lake Jackson, Texas, working through the same idea from a constitutional angle. Heavy regulation tends to produce regulatory capture, where incumbents endure because the rules protect them rather than because customers choose them.

The United States Postal Service is the extreme version. It has lost roughly $100 billion since 2007 and is approaching a $9 billion to $10 billion annual loss, per Litman, and nobody is betting on its disappearance. Meanwhile, FedEx Corporation (NYSE: FDX) and United Parcel Service, Inc. (NYSE: UPS) move freight worldwide under constant competitive pressure.

Survivability and shareholder returns are not the same asset.

Lighter Bank Supervision Is Already Showing Up in Loan Growth

Michelle Bowman's arrival at the Federal Reserve changed the tone of bank oversight. Narrower examinations instead of sweeping audits. Targeted supervisory action instead of blanket reviews. Some relief on capital requirements and a friendlier path for bank mergers.

That frees up management time and balance sheet capacity, and it is feeding commercial and industrial loan growth, per Litman.

The beneficiary is not the obvious one. When airlines and trucking were deregulated, the legacy carriers that leaned hardest on the old rules were not the winners. The nimbler operators were.

That logic points to First Citizens BancShares, Inc. (NASDAQ: FCNCA) rather than the $100 billion money-center names.

First Citizens has absorbed roughly 20 banks, including the Silicon Valley Bank assets that the Federal Deposit Insurance Corporation (FDIC) needed off its books.

A looser merger environment gives a serial acquirer more targets, and organic commercial and industrial lending adds a second engine.

Return on equity at First Citizens screens slightly higher under Altimetry's uniform accounting than under reported generally accepted accounting principles (GAAP) figures, per Litman, which matters because deregulation makes a weak lender bigger just as easily as it makes a strong one bigger.

The share price of roughly $2,000 is not the obstacle some retail investors treat it as. Price reflects share count, not quality, and Berkshire Hathaway has never been held back by it. Litman's preferred entry sits in the roughly $2,150 to $2,200 range, with a margin of safety built on at least a 3-to-1 upside-to-downside ratio and what he describes as high-double-digit percentage potential.

What to watch: commercial and industrial loan balances, deposit costs, and whether the next acquisition announcement arrives on friendlier regulatory terms.

Government Equity Stakes Guarantee Survival, Not Shareholder Returns

Ron Paul calls it corporatism. The federal government stops writing rules and starts taking equity, which means it starts picking winners.

The United States has taken positions in roughly 40 to 50 companies over the past 18 months or so, and the track record since each investment has been poor, with declines of 20%, 40%, and 50%, per Litman. Verify those figures before acting on them.

MP Materials Corp. (NYSE: MP) is the clearest example. The rare earth producer lost money in 2024 and 2025, is expected to lose money again in 2026 on Litman's numbers, and the stock is down roughly 50% from around the date of the federal investment.

Survival is not the question. Litman expects the company to be around. The question is what has to go right for the stock: margins the company has not demonstrated it can earn, achieved at something close to total market saturation in its corner of rare earths. Both look unlikely to him, which is also why he thinks a 50% decline does not make it cheap and could extend further.

The onshoring goal is legitimate. The method is the argument. Tariffs already pushed manufacturers toward domestic capacity, and Taiwan Semiconductor Manufacturing Company (NYSE: TSM) is building in Arizona for reasons that have nothing to do with a federal equity check. Processing limits on China-based refining could do similar work without putting taxpayers on the cap table.

The Cash Test That Settles a Losing Position

For anyone still holding from the hype phase, Litman's discipline is blunt. Imagine the money is sitting in cash. Would it buy the stock today?

If the answer is no, that is a sell, with the proceeds better deployed in something like the Vanguard S&P 500 ETF (NYSEARCA: VOO) or broad exposure to the S&P 500.

He does see a few rare earth names worth owning. The ones with federal backing are not on that list, and the backing itself is the signal to step away. No alternative tickers were named in the conversation.

Follow the Rule Changes, Not the Government's Portfolio

First Citizens and MP Materials are the same question asked twice. Who benefits when the state steps back, and who gets stuck when it steps in.

The bank case depends on supervision remaining light, merger approvals remaining available, and loan demand holding up. It does not depend on rate cuts, an AI narrative, or a market melt-up. The rare earth case depends on margins and market share that have not shown up yet, and a government stake does nothing to produce either.

Stay focused on who is writing the rules and who is taking the equity, because that distinction is what moves these two stocks in opposite directions.

For the full argument, watch Joel Litman's complete conversation with Ron Paul and the deregulation research behind it.

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