Tags: Bove | big | banks | need

Dick Bove: US Economy Needs Big Banks, Don’t Break Them Up

Friday, 12 Oct 2012 09:14 AM

  Comment  |
   Contact Us  |
|  A   A  
  Copy Shortlink
The United States needs big banks and calls to break them up are misguided, said Dick Bove, a banking analyst at Rochdale Securities.

Calls to break up big banks have risen in recent years since the 2008 financial crisis, and came to the spotlight anew when Federal Reserve Governor Daniel Tarullo said in a speech earlier this week that Congress should consider capping the size of the country’s banks.

The repeal of the Glass-Steagall Act in the 1990s allowed financial institutions to run investment banks and commercial banks under one roof. Before then, commercial and investment banks had been separated since the Great Depression.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

But according to Bove, U.S. banks need to stay large to compete in a global financial arena.

“If a governor of the People’s Bank of China had suggested capping the size of these banks and limiting their operating flexibility, it would have been seen as a direct threat to the United States’ position in the world — which it is,” Bove wrote in a note, according to CNBC.

“However, this statement was made by a governor of the Federal Reserve — the governor most charged with regulating the banks. It is a threat to our system.”

Tarullo said in a speech at the University of Pennsylvania Law School that he saw “a case to be made for specifying an upper bound” to the size of the country’s financial institutions.

“It would be most appropriate for Congress to legislate on the subject,” Tarullo said in prepared remarks.

Some lawmakers agree, including Rep. Marcy Kaptur, D-Ohio.

“After Wall Street’s 2008 economic collapse led to the Great Recession, it has become evident that to move forward, we must return to the past to ensure a safe, viable financial system for a 21st-century American economy,” Kaptur wrote in a recent U.S. News & World Report opinion piece.

“We must reinstate the Glass-Steagall Act of 1933. Glass-Steagall is not a one-size-fits-all cure for the ills of the financial sector, but it is exactly the type of reform that Congress must implement against the pleas of Wall Street executives.”

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact Us  |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Wilbur Ross: Investors Have No Alternatives to Stocks

Friday, 21 Nov 2014 11:39 AM

A wide range of financial assets have soared over the past few years, with both the S&P 500 index and the Dow Jones Indu . . .

Parisis: Central Bank Actions to Avert Deflation May Trigger Currency War

Friday, 21 Nov 2014 12:34 PM

U.S. Secretary of the Treasury Jacob Lew on October 15 warned Europe was at risk falling into a downward spiral of falli . . .

Study: Manufacturing Workers Endure Low Wages

Friday, 21 Nov 2014 11:11 AM

The latest employment data drew enthusiasm from many economists, with non-farm payrolls rising more than 200,000 for the . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved