Tags: bove | no | nationalization

Bove: No Need to Nationalize the Banks

By Ellen Chang   |   Monday, 30 Mar 2009 10:31 AM

Nobel Laureate Paul Krugman’s belief that some U.S. banks must be nationalized is not rational, says bank analyst Richard Bove.

The U.S. also cannot afford to nationalize its banks, Bove said.

“If this nation were to nationalize the banking system it would triple the country’s publicly held debt. America simply cannot afford to do this in face of this new financial threat. Nationalizing the banks would cripple the country’s ability to act.”

In a research report, Bove, vice president of equity research for the financial sector at Rochdale Securities, debunked Krugman’s assessment.

“The banks are not going to be nationalized for any reason. Most important, they do

not need to be. They are healthy with positive cash flows.”

Having the government take over some banks is not unusual, Bove said. The FDIC took over 20 banks in 2009 and 45 banks in 2008, he noted. The FDIC acquired over 535 banks in 1988 alone.

New York University economics professor Nouriel Roubini, known as “Dr. Doom,” echoes Krugman’s sentiment.

“Some banks are going to have to be nationalized and for them the plan doesn’t apply,” Roubini said in an interview with Bloomberg Television in London today.

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Nobel Laureate Paul Krugman’s belief that some U.S. banks must be nationalized is not rational, says bank analyst Richard Bove.The U.S. also cannot afford to nationalize its banks, Bove said.“If this nation were to nationalize the banking system it would triple the...
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