Tags: richard | boon | investment | banks

Bove: Separate Investment Banks Will Be Boon

Wednesday, 27 Jan 2010 08:52 AM

The proposed legislation to separate investment banks from commercial ones would be a bonus for shareholders, says Richard Bove, a banking analyst at Rochdale Securities.

Shareholders would welcome the separation and would receive a "boon," he says.

If the government intervenes, it would be a “positive” for companies, he said.

Bove also believes that companies should be able to maintain "enough sense" to divest businesses which are not producing growth.

"There are no great opportunities for growth in consumer finance," he told CNBC.

The credit card sector has too much competition already and the mortgage business is "going nowhere" Bove said.

Investment banking is booming since the economy will grow even more with more acquisitions being completed, he said.

The fixed income market will also see an increase.

“Would you rather own Merrill Lynch or would you rather own Bank of America? I would rather own Merrill Lynch," Bove added.

Limiting the size of banks is a tricky proposition, Peter Wallison, senior fellow at the American Enterprise Institute, wrote in the Wall Street Journal.

“The trouble with limiting the size of these institutions is that no one has the faintest idea what the right size is," he said.

"What's more, if the purpose of the size limit is to prevent a bank or bank holding company from being or becoming too big to fail, we have to know what size would cause a failed institution to cause a financial train wreck. No one knows that, either. Under these circumstances, it's hard to take such a proposal seriously,” he said.

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The proposed legislation to separate investment banks from commercial ones would be a bonus for shareholders, says Richard Bove, a banking analyst at Rochdale Securities. Shareholders would welcome the separation and would receive a boon, he says. If the government...
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2010-52-27
Wednesday, 27 Jan 2010 08:52 AM
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