More Videos
- Peak Oil Closer Than IEA Forecasts Show: Report
- UK Most at Risk of Losing Top Credit Rating: Fitch
- GM CEO Starts Charm Tour at Opel in Germany
- Bad Debt Weighs on Barclays Earnings
- HSBC Operating Profit Beats, US Bad Debts Slip
- Fed's Tarullo Backs Surcharges to Limit Bank Size
- Look Ahead: 'Risk On' Sentiment Could Fuel Rally Further
- European Commission Objects to Sun Micro-Oracle Deal
- Obama Sees Strains Unless US, China Balance Growth
- Why Google is Paying $750 Million for Ad Mob
- Warren Buffett to Sell Stakes In Union Pacific & Norfolk Southern
- Nov. 9: Unusual Volume Leaders
- The Battered Businesses Behind Housing
- Modern Warfare 2's Record-Breaking Launch
- Merck’s Mega-Monday Morning
- Why are Traders Bullish on This Food Company?
- Profiting From Natural Gas: Strategists
- S&P Stocks Trading at New 52-Week Highs
MOST SHARED
- Obama Sees Strains Unless US, China Balance Growth
- Can Apple Top Microsoft as Most Valuable Tech Firm?
- Mad Mail: Buy the Berkshire Hathaway Split?
- Future of Marketing
- European Commission Objects to Sun Micro-Oracle Deal
- Priceline Crushes Profit Forecasts; Shares Jump
- GM CEO Starts Opel Charm Tour in Germany
- JPMorgan Lifts Salary Freeze Amid Recovery
- A Year on, China's Stimulus Postpones its Problems
Text Size 
The Treasury Department made a big mistake with the initial plan to price toxic assets in the financial system and is now bungling the recapitalization of banks, Eric Hovde, CEO and portfolio manager at Hovde Capital Advisors, said Thursday.
"There was no way they could properly value the assets without wiping out the capital in the banking system," Hovde told "Squawk Box." "There was no way to properly manage the assets (and) there was no way to dispose of the assets, without cratering the real-estate markets any further."
(Watch the accompanying video for the full interview...)
(The Treasury is a) "bunch of Goldman Sachs guys," he said. "We have a 35-year-old technology investment banker running the TARP that has no background in financials or in real estate or was around during the last banking crisis."
"Then they switch and change to what should have been done and that's injecting capital into the banks," Hovde said. "However, they've even messed that up."
It was the right decision to start to recapitalize banks, but the fact that the money was given away without more punitive terms—for example allowing some banks to sill pay common stock dividends—has just created more problems, he said.
"Now they've created this aura where if you don't take the capital you're being deemed as an institution that couldn't get it so you're in trouble. It's insanity," he added.
Banks are asking "why not" take the money at terms that are more favorable than getting capital from an investors like Warren Buffett, he said.
Print
Email
- Do free market libertarians really believe what they say about ethics and shareholder value? The Big Money takes a look.
- Cramer did the research and found eight stocks that lead the pack. Read on to get his top picks.
- On the anniversary of the fall of the Berlin Wall, many in the former Eastern Bloc recall communism fondly.
- Software, biotech firms, even banks are watching a particular Supreme Court argument today.
- From politicians to CEOs to companies, here's your chance to vote for the winners and losers of 2009.
- A new sinister Internet viruses can turn you into an unsuspecting collector of child pornography.
Data is a real-time snapshot *Data is delayed at least 15 minutes