Tags: Bove | banks | new-york | lawsuit

Bove: Banks Should Leave New York for Greener Pastures

Tuesday, 02 Oct 2012 03:06 PM

Banks should consider leaving New York City to escape ongoing lawsuits and a general lack of support for the industry and consider moving to more business-friendly states like North Carolina, said Dick Bove, a noted banking analyst from Rochdale Securities.

New York Attorney General Eric Schneiderman recently filed a civil fraud lawsuit against JPMorgan Chase concerning securities sold by Bear Stearns, which JPMorgan bought in 2008.

The lawsuit claims that Bear Stearns failed to ensure the quality of loans forming part of mortgage-backed securities it sold in 2006 and 2007.

Editor's Note:
How You Lost $85,000 During the Last Decade. See the Numbers.

Banks have been subject to a slew of high-profile lawsuits in the past, including under former New York Attorney General Eliot Spitzer.

"Management should consider the benefits of moving their headquarters elsewhere. Shareholders should not be forced to pay for continuous lawsuits because these banks are in New York," Bove wrote in a note to clients, according to the Charlotte Observer.

"If the industry was located in Charlotte, North Carolina it would not be facing constant hostility it would be supported by a government that wants its business."

Other states play host to many industries and work to keep them there, not punish them.

"I am constantly struck by the fact that Michigan does not sue the auto industry; Texas is not suing the oil industry; California is not suing the entertainment industry; and Florida is not suing the tourism industry," Bove wrote, CNBC reported separately.

"They do not sue farmers in Iowa. New York never stops suing the financial industry. Why? What do these other states understand that New York does not?"

JPMorgan says it will fight the lawsuit, adding it acquired Bear Stearns after any alleged practices took place.

"The NYAG civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the U.S. Government. This complaint is entirely about historic conduct by that entity," the JPMorgan statement said, according to Reuters.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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