Is the Financial Crisis Over? Some Believe It May Be

After the Federal Reserve's aggressive moves this week to ease the credit crunch, some on Wall Street are starting to wonder if the worst is finally over.

Well-known banking analyst Richard Bove even delivered a report on the financial sector Thursday with the bold heading, "The Financial Crisis Is Over."

Bove, of  Punk Ziegel, admitted in the note that such a proclamation "sounds ridiculous," but he genuinely believes the crisis is over.

"There will be more negative developments, but they will be meaningless," Bove wrote.

Later, in an interview on CNBC, Bove said: "I'm convinced that all the signs that you would want to see that would tell you that this thing is over are there. And this is over."

Bove said last weekend's rescue of Bear Stearns was the watershed event that heralded the end. "This event sent so much fear through the market that action was taken," Bove wrote, calling the Fed's actions, "innovative, dramatic, and ... brilliant."

Still, most aren't convinced. Many on Wall Street argue that the problems may be subsiding in some areas of the financial sector, but they're going to spread to other areas.

"I admire a courageous call by Dick Bove," Art Cashin, director of floor operations for UBS Financial Services, told CNBC, but "I’m not sure we’re totally out of the woods."

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"The focus is going to shift from the brokers and the bankers to the hedge funds now, Cashin said. "And that’s so opaque that the rumor mongers are going to have a field day."

That sentiment was echoed later by Marc Pado, U.S. market strategist at Cantor Fitzgerald, who told CNBC that he agrees that the crisis will now ripple into hedge funds and we'll see another Carlyle-like collapse.

(See CNBC interview with Richard Bove at left.)

"This is a bottoming process," Bob Doll, CIO of Blackrock Global told CNBC.

"I don't think anybody rings the bell, but it's a process and you have to start thinking more construcitvely about parts of the financial structure," Doll said.

Fred Cannon, chief equity strategist at KBW, cited three reasons why the financial crisis isn't over yet.

First, CIT Group's announcement today that it would draw on a $7.3 billion bank lineto help conduct daily operations "shows the liquidity issue isn't quite over," Cannon told CNBC.

Second, the financial sector still needs raise a lot of capital, Cannon said.

And finally, "The credit crunch may be lightening up on Wall Street but out on Main Street -- out to consumers and businesses across America -- banks are tightening," Cannon said.

Bove, for one, thinks this is a "once in a generation opportunity to buy bank stocks."

"The Federal Reserve has actually created a template that will increase liquidity in the banking system and, just as importantly, bank profits," Bove wrote. "The decline in capital markets has created for banks, at least, an opportunity to take market share from the brokers."

At least two money managers agree it's time to buy.

"This is the time to be building positions" in the financial sector, Jeff Krumpelman, senior portfolio manager at Fifth Third Asset Management, told CNBC. Though, he clarified that they're looking at banks and diversified financials such as J.P. Morgan.

He also recommend Lehman Brothers.

(See CNBC interview with Jeff Krumpelman at left.)

"Lehman is an example, I think, that folks were fearful of going into the week," Krumpelman said. "But that's an example of a name that I think I would own." 

Bove noted that the stocks of Lehman and others went up after reporting earnings this week, but it wasn't because they beat expectations, as widely reported. It was because the reports showed that the firms were not capital short, had ample liquidity and, "most important, they showed that they were open for business," Bove wrote. "They were able to actively sell subprime assets and 'hung' loans."

Doll is also selective, focusing on high quality names in the banking and insurance sectors such as Goldman Sachs, JP Morgan, Chubb and Travelers.

Financial stocks rallied Thursday, with Bear Stearns, Lehman Brothers and Merrill Lynch up more than 10 percent. JP Morgan Chase and Goldman Sachs gained about 8 percent.