This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

[video] Quick Take: U.S. Banks Under Attack

NEW YORK (TheStreet) -- Dick Bove, bank analyst at Rafferty Capital Markets, said big U.S. banks are under pressure, but are still worthy of being invested in. Alongside Dan Freed, senior writer at TheStreet, Bove explains in further detail. 

Bove was swift when defending why the U.S. needs its big banks. He suggested that in a huge global financial system, comprised of roughly $56 trillion in convertible currencies, having big banks was simply a must-have. 

He added that without big banks, large U.S. and multi-national companies would have to seek funding from overseas. The companies would be forced to do so because there is only so much a bank can legally lend, relative to its size. 

Furthermore, the U.S. government uses 21 prime lenders. Of those 21, 14 are foreign institutions, while only 7 are U.S. institutions. If our banks continue to shrink, the U.S. dollar may lose its place as the reserve currency of the world, he said. 

Bove added that if that were to happen, the U.S. government would be forced to pay back its debts, which would wreak havoc. 

Optimistically, he said that U.S. banks will be the most profitable in their long history in 2013, and are likely to surpass that mark in 2014. 

Freed questioned how much bigger banks could grow, considering how massive they've become after acquiring many failing banks during the financial crisis. 

Bove pointed out the sheer size of other institutions around the globe -- like the Industrial and Commercial Bank of China, which will make more money in 2013 than both J.P. Morgan (JPM) and Wells Fargo (WFC) combined -- and suggested that there is still room to grow. 

That growth, however, is being stymied by U.S. regulators looking to downsize and prevent U.S. banks from getting bigger. 

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs