Dick 'I play an analyst on CNBC' Bove says Mass Hysteria’ Hurt Financial-Reform Law

Dick 'I play an analyst on CNBC' Bove:

While “the banks did not act honorably in terms

of doing an incredibly bad job in underwriting” mortgage securities,

there also was “misrepresentation of what the actual problem was..”

By Daniel Kruger and Tom Keene

Sept. 13 (Bloomberg) -- Legislators who don’t understand the banking industry and a sense of “mass hysteria” led to the passage of a financial-reform law that will hurt U.S. consumers, said Richard Bove, an analyst at Rochdale Securities.

“We went into a period of mass hysteria,” Lutz, Florida- based Bove said in a radio interview today with Tom Keene on “Bloomberg Surveillance.” “Every American will discover over the next 12 months that every service that he receives from banks in the United States now will cost more and there will be fewer services available.”

President Barack Obama signed the legislation on July 21. It gives the government new authority to unwind failing financial firms that may threaten the entire system, imposes new rules on derivatives markets and creates a consumer-protection agency at the Federal Reserve to monitor everything from home loans to credit cards.

While “the banks did not act honorably in terms of doing an incredibly bad job in underwriting” mortgage securities, there also was “misrepresentation of what the actual problem was,” Bove said.

“Because we have a bunch of legislators who clearly don’t understand the banking system in the United States attempting to come up with solutions for how that system should be operated, we came up with solutions that are going to be harmful to the American public,” Bove said.
The lack of financial acumen in Congress means the law may not resolve issues it was intended to address, such as the impact of proprietary trading in the context of systemic risk management, he said.

“What the government has done is, it’s pushed prop trading out of the regulated companies and into the non-regulated companies,” Bove said. “To whatever degree they wanted to gain some control over prop trading, they eliminated it.”

Financial Reform: Wall Street Wins, Investors Lose (Jacob Zamansky-Forbes)

Financial Reform: Wall Street Wins, Investors Lose

Jacob Zamansky, 06.26.10, 10:40 AM EDT

Forbes.com

Fraud, sleazy sales tactics to go on as before.

 
If you want to know who got the upper hand when it comes to the financial reform bill, follow the money. Bank stocks are currently trading higher and financials are outperforming all other sectors. As Dick Bove, a high-profile analyst that covers Wall Street, put it, “I think I would be buying bank stocks this morning.”
 
That’s because the financial reform bill Washington is touting didn’t protect investors in any substantive way. Congress failed to address the Supreme Court’s “Stoneridge” decision, which would have afforded investors protection against Ponzi schemes and other large scale frauds commonly aided and abetted by large financial institutions. And don’t let the headlines fool you, Congress totally punted on the requirement that brokers put their clients’ interests ahead of their own, the so-called fiduciary standard. Failing to address these two issues is a one-two punch in the gut for investors.
 
As I previously predicted, Wall Street was able to stonewall the Stoneridge provision. A few members of Congress initially used the issue to garner some good press, but in the end they caved to Wall Street’s pressure. Had they stood up to the industry’s powerful interests, a provision to combat the Stoneridge decision at a minimum would have forced investment banks, accounting firms and other gate-keepers to perform a reasonable amount of due diligence on those they choose to do business with.
 
For example, if a bank knew it could be held liable for actions related to its dealings with a convicted felon, do you really think they would risk litigation in order to make a few shekels? I think not, but as it stands, firms can act with near impunity and support criminal activities knowing they are afforded protection by the Stoneridge decision.
 
As for the fiduciary standard, time will tell whether the members of Congress that loudly supported the standard will regret caving and agreeing to “study” the change’s effect. Apparently it didn’t matter that the SEC already studied the fiduciary standard and found that investors didn’t know when they were getting actual financial advice as opposed to being sold a product. Without a congressional mandate, it’s unclear whether the SEC will have the gumption to make an investor-friendly decision and adopt the standard broadly.
 
Though Chairman Mary Schapiro very publicly has endorsed the wide adherence to the fiduciary standard, the SEC is currently very divided. SEC investigators were only authorized to file charges against Goldman Sachs ( GS - news - people ) after SEC commissioners voted 3-2 along party lines. Indeed, getting SEC’s decision-makers to agree on anything is an uphill battle to say the least.
 
It’s actually a pretty sad day for investors, yet without a doubt some are seeing short-term gains as a result of Congress’ gift to Wall Street. Long-term, however, Wall Street has gained the upper hand and has shown Washington who’s in control.

Jacob H. Zamansky is a principal at the law firm Zamansky & Associates.

Grandpa has nothing more to say......for now

Dick "I play an analyst on tv" Bove upgrades Suntrust Bank

Dick "I play an analyst on tv" Bove upgraded Suntrust Bank today from Sell to Neutral.

SunTrust upgraded on better real estate markets
Associated Press

SunTrust Banks Inc. will benefit from a recovery in the housing and commercial real estate markets as well as from oil spill money, a Rochdale analyst said Tuesday as he upgraded the bank holding company.

THE OPINION: The housing market seems to have bottomed in the regions where SunTrust services loans, Rochdale analyst Richard X. Bove said. He expects that the company's loan losses from housing will peak soon. Additionally, commercial real estate values are stabilizing, so owner defaults are less likely, he said. Furthermore, some of the money paid to companies and households hurt by the oil spill in the Gulf of Mexico will be deposited into banks and will be used to pay off loans, Bove said.

Bove upgraded the shares to "Neutral" from "Sell." His price target is $25

Grandpa: Mr. Bove remains dazed, confused and consistently shows up late on every call. He downgraded Suntrust on 10/26/09 noting that the bank may not show a profit until 2011. The stock closed at $19.65 on the day of his downgrade.

The stock ended 2009 at $20.29 and printed a closing high of $30.44 on 5/3/2010. Yesterday, the stock closed at $25.69 and today Bove raises his rating back to neutral and a $25.00 price target. The stock closed today at $26.57. Nicely done Dick, see you on your next CNBC visit. The fact you have a job is amazing. The fact that anyone would consider trading based on your opinions is astonishing.

Dick "I play an analyst on TV" Bove still buying Goldman Sachs

Monday, April 26th on CNBC...
Dick Bove remains bullish on financials and is still buying Goldman Sachs and believes Citigroup is an $8.50 stock. Clearly CNBC is one of the few finanical outlets for Dick "I play an analyst on TV" Bove to spew his opinions. Pay attention grandkids as this is why mommy and daddy tell you not to talk to strangers.

For the record, Goldman Sachs closed the week at $145.20 (note $157.40 on the screen during the interview) and Citigroup closed the week at $4.39.

Dick Bove: "I'm not an analyst but I play one on tv"

Dick Bove plays the zany scatter brained analyst on CNBC and makes an occasional guest appearance on Bloomberg. Dick is noted for passionate recommendations on financial stocks early in each episode and then changing his opinion just before the end of the show. The show’s ratings went parabolic since Bove developed his “BS (bank stock)” app for the iphone.

For those that have yet to download the app, it provides the user with an automatic “buy Bove’s bank rating” default. Once 100 shares of the bank stock Dick is analyzing are purchased, a timer automatically engages tracking the amount of time remaining in the trading session. The stock will automatically be held overnight unless the one opts to use their one time “sell at the close” option. If one sells the stock at the close they keep any gains less a 2% royalty to Bove. The app’s exciting feature is when the stock is held overnight.

If Bove does not change his opinion after the market closes and the stock continues its run, the owner of the stock receives 2 times the gain courtesy of the BCDS (Bove Credit Default Swap) underwritten by Goldman Sachs. If Dick does change his opinion of the stock after the market closes and the stock plunges the following day, Bove waives the royalty fee.

Recap of most recent episode (Friday, April 16th):
Episode: I'm just an analyst doing God's work
Broadcast at 8:43 am ET

Dick Bove assures CNBC viewers that Goldman Sachs (GS) is an aggressive a buy in spite of the SEC fraud lawsuit brought against the firm. He also stated that GS will pay a fine and this situation will pass. At this point in the episode, GS was trading around $171 per share, down $13 and change. Bove reiterated his buy recommendation even after fellow actor (Mark Haines) argued that fraud is a big deal.

GS closed at $160.70, down $23.57 on the day and down $11 and change from Bove’s reiteration of a buy rating.

After the close, Dick Bove made the following comments in his note to clients:
“Will Lloyd Blankfein, CEO, and David Viniar, CFO, maintain their positions in the company? I do not think so.” “Someone must ‘fall on their swords’ for the devastating decline in this company’s persona and they may be forced to do so for public relations reasons.”

Other popular episodes:
Wells Fargo proving itself to be a standout…downgrade to sell (Oct. 2009)
Financial crisis is over (March 2008)
Once in a generational opportunity to buy financials (March 2008)
The housing market has bottomed (Oct. 2009)