×

New Banking Regulations Will Cost Consumers: Bove

Consumers will end up paying more money to banks if the numerous regulations proposed for the financial sector come to fruition, said Dick Bove, financial strategist for Rochdale Securities.

Wallet
Wallet

"The one thing that the consumer can be absolutely certain of is that the cost of financial products — credit cards, home equity loans, mortgages — are going to go higher," Bove told CNBC.

On top of the possibility of creating a consumer protection agency, the Federal Reserve on Tuesday proposed stricter credit card rules, which would prohibit an increase in interest rates the first year an account is opened. The rules would also ban increases in rates that apply to an existing balance.

Also Tuesday, the FDIC suggested banks prepay three years worth of fees to help fund the cost of bank failures, which have risen from 25 last year to 95 already in 2009.

While Bove said there is no question that the banks, not the taxpayers, are responsible to pay these fees, he said it isn't the right time for the government to make a move.

"The lunatic's running the asylum right now," he said. "They're really moving a lot too agressively to stop the banks from lending, even though they claim they want the banks to lend more."

Bove also said that contrary to what was said at last week's G20 Summit, it makes no sense for banks to increase their capital at this time.

"The banks have never had this much capital as a percentage of assets, so to ask them to increase their capital at this point is simply asking for the economy to be hit," he said.