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Stifel Nicolaus Portfolio Manager Chad Morganlander explains how regulation will impact bank stock prices.
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-- not a horrible question Chad Morgan landed joins us from Stifel Nicolaus portfolio manager -- he he's here in studio.
Do you start to prepare for more -- -- tougher financial regulation may -- that you thought before the -- JPMorgan deal.
I absolutely this certainly puts a lid on the banks in particular the very in the mega banks right and what we're really concerned about is the creation of credit.
And if there is this a great deal of regulation or uncertainty that regulation.
Then of course this is going to have that but the -- affect on the stock prices.
Of these major global bank but in terms of the creation of credit would -- -- players willing and ready to step then and offer up that credit to creditworthy borrowers be it companies or individuals if.
I JPMorgan pulls away well you don't think you would think so but that's on a standalone basis keep in mind that.
Then the policy makers have to turn their attention to Fannie Mae and Freddie Mac next okay.
And that uncertainty as well could create some limitation.
Of writing on the writings and whatnot now there are other smaller banks -- can fill in that credit cycle we do recognize that we keep.
Keep in -- this -- these are very large value.
Actually I think that lawmakers are gonna start trying to dismantle or pull up pull away from -- and Freddie Mac I say that nobody no no no but that's the next.
That's next volume of the book what are they gonna do everyone's been completely silent about that.
And the losses continue to go go higher.
You -- -- -- their next after they're done with after they're done with that -- -- they value and -- with the banks because she did your -- point there at the end senate these are large institutions and the argument would be that there way too large and that's part of the problem or that creates more problems.
Citibank and JPMorgan and others just too big break them up now now I don't believe you need to do that that's not necessary you don't have to do that -- -- eighteen -- amount now.
Because I think that they right now at this point in the cycle they have the -- with the regulation.
That is is fine.
To monitor these banks a look at argument for a financial supermarket now and 2012.
Which we don't need it why -- -- habit of it creates more -- in the -- and the odds are higher that in no -- could happen again nothing that's why it happened best decision made didn't decision -- in making point of -- -- of the -- the private entity it's not at this point.
For regulators to try to situated where they should break up what -- Outside -- the level everybody seeing it turned the immediately turned their attention the day after.
This these losses were disclosed two more regulation but what about the level of risk taking.
At these big financial institutions.
You have other firms Goldman Sachs and Bank of America trading against JPMorgan.
To JPMorgan's lost in her heart.
Is there gain according to the Wall Street Journal but I'm saying they include JPMorgan the smartest bank.
In the business didn't have a handle on what -- own people were doing.
Right there's been very they -- their their portfolio book with derivatives and of course any type of this calculation there will be a loss against that.
And what you need to do here is you just I think that the general public -- -- step back and understand that JPMorgan.
Is well capitalized bank they're going to earn over ten billion dollar -- and that very their business operation is functioning well and does serve the community.
Will wrap this up for today but we'll have you back and we'll talk more about where you're putting your money these days but thank you -- thanks -- thank -- so much.
