Tags: dick | bove | us | economy | fed | easing | qe3

Bove: Bring on QE3 – by Freeing Bank Reserves

By    |   Monday, 06 Jun 2011 09:05 AM

The Federal Reserve’s latest round of quantitative easing (QE2) is scheduled to end June 30. So what should the Fed do next?

Get creative and implement a different kind of QE3, says star bank analyst Richard Bove of Rochdale Securities. The weak May employment report confirms the need for such action, he writes in a commentary obtained by Business Insider.

In QE3, the Fed should encourage banks to lend out their net free reserves, Bove believes. Net free reserves represent the money held by banks above the minimum required by the Fed.

Dick-Bove-3-thumb-200.jpg
Dick Bove
(file photo)
And how does the Fed get banks to lend out those reserves? “A reduction in the stringent regulations now being applied to the banking industry,” Bove writes.

Government tax incentives to “stimulate capital spending and/or job growth” would also help, he says.

“The American economy has functioned without assistance from its banking industry for the past 2 1⁄2 years,” Bove argues. “It may need this assistance now. The money is there, it simply needs to be made available.”

In the wake of the May jobs report, others call for QE3 too. "The U.S. economy is stalling. There's a fair amount of fear and loathing in the market already,” Scott MacDonald, head of economic research at Aladdin Capital Holdings, tells Dow Jones.

“The (jobs) number ... puts greater pressure on the government to consider something to keep the economy going, including QE3."

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
The Federal Reserve s latest round of quantitative easing (QE2) is scheduled to end June 30. So what should the Fed do next? Get creative and implement a different kind of QE3, says star bank analyst Richard Bove of Rochdale Securities. The weak May employment report...
dick,bove,us,economy,fed,easing,qe3,Bank,Reserves
237
2011-05-06
Monday, 06 Jun 2011 09:05 AM
Newsmax Inc.
 

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.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved