Dick Bove: US banks have been 'nationalized'

Dick Bove:  Invest in regional banks
Dick Bove: Invest in regional banks

A transportation bill in Congress has put the U.S. well on the road to socialism, Dick Bove said Monday.

The bipartisan Senate bill, announced in July, would cut the dividend paid by the Federal Reserve to banks each year from 6 percent to 1.5 percent, and the difference would go toward funding highway projects

"The government has taken the position that, because they offer FDIC insurance, they have the right to invade banks," Rafferty Capital Markets' vice president of equity research told CNBC's "Squawk Box."

"Unfortunately, I believe the banks have been nationalized; I believe we're well on the road to socialism in terms of the way we're taking money flows out of the banking system and putting it into highways," he said.

Lawmakers said the bill could provide three years of funding for the nation's crumbling highways, bridges and rail systems.

"They are not only setting very tough regulations concerning how the banks function, but with the highway safety bill, what they're doing is saying 'we're going to take some of the revenues from the banks and use it to repair highways,'" Bove said.

Bove also discussed his earnings outlook for the banking sector with big banks JPMorgan Chase, Bank of America, Wells Fargo and Citigroup scheduled to deliver quarterly results this week.

"You should really separate the big banks from the regional banks in the United States and your money should go toward the regional banks," Bove said, echoing an op-ed he wrote for CNBC last week.

"The problem the big banks have is that they have big capital markets businesses. They do trading, investment banking, investment management, and none of those businesses did well in the third quarter," he said.

Bove also said that the strength for regional banks rested on providing loans to customers, "and that did do well in the third quarter."

—Reuters contributed to this report.

Dick Bove
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