Breaking Up US Banks Means Chinese Banks Win: Bove
The efforts in Congress to break up "too big to fail" banks in the U.S. run the risk of allowing Chinese banks to takeover as leaders on the world financial stage, an influential banking analyst told CNBC on Tuesday.
"You've got four big banks in the United States and all the United States Congress wants to do is rip them apart," Rafferty Capital's Dick Bove said in a "Squawk Box" interview. "If you rip apart all the big banks in the United States, while the Chinese banks are growing rapidly, than the Chinese will takeover the global financial system."
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The 2010 Dodd-Frank financial reform law was designed to end government bailouts of "too big to fail" banks by creating mechanisms for winding down large insolvent financial institutions. Some U.S. legislators are looking to increase capital requirements on the biggest banks, to reflect the fact that these companies could still end up being bailed out in the next crisis.
"[They] want to destroy the position of the United States in the global financial markets," Bove said.
He further explained, "There are four Chinese banks that make more money than any bank in the United States. "They're growing rapidly. They are supported by the government."
The People's Bank of China, for example, has $3.5 trillion in assets, he said, "more than any bank in the United States and certainly way more than the United States Federal Reserve."