Dick Bove: Failures Could Tap 25% of Healthy Banks' Earnings
Richard Bove, financial strategist at Rochdale Securities, said he expects 150 to 200 more U.S. banks to fail in the current banking crisis. (What banks does he like?See below.)
“The cost of covering those failures will be extraordinarily high for the healthy banks,” Bove told CNBC.
“The healthy banks may have to set aside 25 percent of their earnings next year to pay for the failed banks, and that’s going to cause the earnings to be less than people expect.”
This will likely force the FDIC, which insures deposits, to turn increasingly to non-U.S. banks and private equity funds to shore up the banking system, said Bove.
More from Bove:
- US May See 150-200 More Bank Failures
“Who is going to buy the failed banks? We’ve run out of names in the U.S.," he said. "Most of the buys are going to come from either foreign banks or private equity firms.”
However, Bove said he does not support the idea of private equity firms buying banks.
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“We see a commingling of the financial sector with the industrial sector and that’s always been a mistake wherever it’s been tried. I don’t think it should be done in this country—but we’re desperate,” he said.
Bank of NY Mellon
Bank of America
No immediate information was available for Bove or his firm.