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Cuomo's Bank Probe Is Politically Motivated: Bove

Thursday, 13 May 2010 | 1:20 PM ET

The New York Attorney General's investigation into whether eight big banks misled rating agencies about mortgage securities is an "orchestrated political campaign" to get the financial regulation bill through Congress, said Dick Bove, financial strategist at Rochdale Securities.

Playing the Financial Sector
Richard Bove, of Rochdale Securities, and Jeff Harte, of Sandler O'Neill, share their best plays in the financial sector.

"It’s almost incredibly hypocritical that the father of the subprime crisis, (New York Attorney General) Andrew Cuomo—who had done exactly what he’s accusing these banks of doing when he was secretary of HUD—would turn around and accuse these banks of doing something wrong," Bove told CNBC in a live interview.

Cuomo is investigating whether the eight banks provided the ratings agencies with false information to get better ratings on the risky securities.

Those targets are Goldman Sachs, Morgan Stanley,UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch, which is now owned by Bank of America.

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Cuomo, who was secretary of Housing and Urban Development from 1997 to 2001, has been blamed in some quarters for helping to trigger the financial crisis by pushing Fannie Mae and Freddie Mac to buy more subprime mortgages to increase home ownership among the poor. Many of those homeowners eventually defaulted, and the mortgage-backed securities market later collapsed.

Bove has been a frequent critic of Cuomo. In a March interview on CNBC, Bove said Cuomo's aggressive attacks on Wall Street could make him dangerous to the banking sector if he becomes the next governor of New York. (Click here for story).

When contacted by CNBC.com on Thursday, Cuomo's officie didn't immediately respond to a request for comment.

Separately, Bove said bank fundamentals will ultimately be affected because there’s “no way to avoid a bankruptcy or default” in Greece and other countries in Europe.

“If we apply the Latin American template to what’s going on in Europe, we’re going through a delusional state that if we print money and lower interest rates and reinflate the economies, we’ll solve the problems,” he said. “Of course we won’t and these countries will default.”

“Therefore, you have to take a look at the bigger banks and there are five in the U.S. which are at risk here because they’re going to be writing down European debt,” he continued. “If you look at the domestic banks like USBancorp, BB&T, PNC or Fifth Third—those companies are not going to be affected by any of these things that are talking about.”

Bove Likes:

Bank of America

JPMorgan

Citigroup

Morgan Stanley

Goldman Sachs

BB&T

Fifth Third

PNC

US Bancorp

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JPM MLP ETN
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PNC
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USB
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