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Now securities that banks taking down the markets is Nicole showed us both here and across the globe and you say it's gonna get worse because the US government plan.
To break up the big banks here is that what makes you say that -- Well I think that United States government is pretty clearly indicated that that's what it wants to do in other words.
When they pass the Dodd-Frank act when they -- intensity too big to fail situation.
When they increase the capital ratios of the increase that liquidity ratios.
When they started suing banks have both at the federal -- the state level and they explicitly stated more than once that we don't want full of banks have 50%.
Of the banking industry in the United States so United States is serious it doesn't want to have all these big banks it wants.
The banking business spread over a much quite a number of companies in the doing everything possible to see that that happens.
The literally was an impact on the economy and taking fingers will -- one over the next eighteen months where many analysts say this could be in the next five to ten years you think it's gonna happen quicker.
Yeah I think so because I think if you take the pressure on Bank of America for example.
Think about it B the total market cap of Bank of America right now is somewhere around seventy billion dollars yet it has a credit card business which is worth 75 billion dollars.
It has Merrill Lynch which is worth 75 million dollars.
It -- deposit business which depending upon where interest rates are can be anywhere from 25200.
It has another business and corporate lending which is -- sixty billion dollars.
Which means that you've got about 225 billion dollars worth of if you will capital in that company in the capital but market value.
In that company can subtract from that would have you think the loan losses -- going to be -- -- not gonna get it down to seventy billion.
But yeah and sentencing out by a -- but is isn't good or bad thing that the US as you say.
May and -- the fact our approach wanna break up of the big US banks is that a good or bad thing for the US economy.
Well the short run it's an extraordinarily bad thing for it because what it's doing is it's restricting credit.
From the US economy in other words right now -- one point six trillion dollars.
In bank deposits sitting at the Federal Reserve they're called.
Net -- reserves but it's bank deposits sitting at the Federal Reserve that one point six trillion dollars should be in the economy.
It's not in the economy because banks are putting themselves into a defensive position.
So that as the government comes at them they'll have the funds take care of the attacks so the net effect is that's one way that they are preventing money from getting.
To the economy.
Another way is we'll take two banks Comerica which is a a lender to corporations and mid and small size businesses and Bank of New York.
Co America has to have three dollars more in capital.
For every dollar of assets that it has.
Of America's assets -- loans Bank of America Bank of New York does it need to ask that because they don't lend money.
Rights of those the more money you -- the more capital you need which means that the government is giving you.
Very negative pressure to stop lending in -- I didn't get cat and he's in the context of financial -- -- we've seen this before the railroad stocks about a 112 years ago that was a major.
You could call it a monopoly that the government -- how is this different -- -- -- It's the same.
No it's what the United States government has decided -- and I'm not saying whether they're right or wrong.
Who have made this decision because you know basically for banks and 50% of the assets of the United States.
Banking system and those banks took advantage of their their position in cause harm within the system.
But the fact of the matter is that the government -- made the decision that.
They're not going to be for banks and has 50% of the banking system in the United States.
And they're moving so aggressively.
Against these banks that they're having a significant impact.
On credit creation in the US economy can't the only thing these banks can do is protect themselves.
And Dick do you think the trigger point here as you could say possibly a break up of the US banks is.
The happening about being pushed behind the scenes by by the United States.
Do you think the trigger point here could be that lawsuit that was filed against the seventeen banks for the rotten mortgages that Fannie -- and Freddie by the way lowered their own credit quality standards -- the eaters.
Hater and a better here do you think that could be the trigger point.
I think that's the struggle broke the camel's back it was a really think that you know basically.
You know we we've had the Dodd-Frank act which you know demanded that these banks be.
You know reduced in size we've had.
All of these regulations coming out of effect we've had.
Price fixing agreements we've had a whole bunch of things occurring and you know ultimately you've reached that point.
With finally the system simply can't take it anymore.
And I think we've reached that point and I think this lawsuit.
Is that that that the point that we've -- which says if you're thinking of investing in banks you know think about what their breakup value is don't think about what they Gunner.
Nicole let me bring in very quickly Deutsche Bank C -- Joseph Ackerman says you know what it is also in 2008.
All over again they're -- say it's not quite as bad as that but he's stated that very -- this past weekend.
What are you hearing on the floor.
I heard that I actually heard that -- early this morning it doesn't -- -- for that then my mentality in the psychology.
Of European markets right as well as here at home on the floor got -- high -- of folks are.
They get a lot more selling and buying an even going into the closing down their folks are saying well we'll -- down 4500 points still Green.
So embarrassed that we should have been down 700 points on Friday would know jobs created.
So with that and the worries about Europe and worries about US double dip recession.
We see the pressures on right now.
Yeah no doubt all right Dick bove a Iraq -- securities Nicole on the up rolled NYSE and -- but this AMA thank you guys --
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