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Bove: Bank Breakup Talks Will Now be Back

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    Rochdale Securities bank analyst Dick Bove on the fallout of J.P. Morgan's losses.

  • Duration 3:47
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This transcript is automatically generated

But don't hear that very often well.

A different way covers and JPMorgan for -- -- securities his.

-- thank you for joining us that it's good to see you again.

You just cut -- earnings estimates on JPMorgan you -- worried about new regulations on the banks as a result of this mistake by JPMorgan.

But yeah I think you have to look at this thing at three buckets number one there is an impact from JPMorgan which is.

Well beyond what happens this quarter because obviously.

There's a major problem in the operation of its risk management systems.

And in its trading operation and it'll take.

You know twelve to eighteen months at a minimum to fix that.

Which is why you know I think the earnings estimates will be a little bit lower for both 2013 and 2014 as a result of it.

Number two I think that as -- second bucket of issues you dealing with the fact that what.

Is perceived to be the best managed bank in the United States just -- massive mistake and as a result of that you gonna find that the Volcker Rule.

May not be put off for two years you're gonna find it all this talk about breaking back breaking up the banks is gonna be back.

You gonna find that the issue that they would do would.

Ten days ago when they all these banks CEOs that what the Fed you know -- gonna go against the banks so and it could even be a presidential election issue you know.

I was right you know these banks are no good these people don't know what they're doing -- senator etc.

and then of course the third bucket -- dealing with is that.

You know the press turned up this issue not the bank and you know that's devastating it's basically.

Leading to a confirmation of the view that you simply cannot believe.

Anything a banker says and therefore.

You know you gonna see an impact on the stocks -- but you know we need when you take all these negatives and your wrap them up all together.

JPMorgan is gonna make sixteen billion dollars this year and will probably make close to 21 to 22 billion dollars next year -- know how how badly do you wanna hit the stock.

Right plus -- just a quick question got to wrap very soon here.

Do you think that -- JB -- smartest guys anywhere was unable to get this right that government regulators in Washington to do a better job of getting this right.

No they're not and we you know we're in -- big world this is not Estonia will not dealing with fifty cents in terms of trading we're dealing with.

A multi trillion dollar market actually over point -- billion dollars in size and you gonna make big hits on them.

On the -- side big losses on -- on the lose sight.

The -- -- -- rest at a Connecticut deck is this this -- the crux of the issue credit has got a completely change.

How they handle risk at the bank.

Yes they do it and it shows the what they've been doing in terms of handling risk that the bank.

To this point -- been inadequate and incorrect.

Current and look at what was it -- You'll use who get these rogue trader Cheryl is some guy out of control that no one knew about it but in this case -- -- like everybody the highest levels knew exactly what was going on.

That's correct which means that a lot of people gonna lose their jobs is going to be a lot of shifts.

In the way they'd -- operation functions he can't have the CFO of the company.

Getting on a conference call and saying that this is a this is not a problem which is what he did.

So you know that there are a lot of things that went wrong here and they went wrong at the wrong company because this is the premier company in the banking industry.

So again you know all of the people bullish on banks myself.

You know certainly affected the -- -- that you know are gonna have to take a back -- and take a hit here.

But you know 50% of the banks stocks -- -- today the market is up today it's up despite the fact that JPMorgan is down 7%.

Which tells you that you know may be this this is this is not the great crisis that it -- that led to be -- thought to be.

-- good -- what does securities banking analyst Dick thank you for weighing Amazon is great to have you on the show for the us.

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