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FBR Capital Markets Managing Director Paul Miller argues Jamie Dimon is wrong and that large banks such as J.P. Morgan are too big to fail.
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-- -- so now.
You could sit there and talk about JPMorgan all you want but we -- top analyst -- -- -- -- totally wrong.
This -- is way too big to fail Paul Miller is the managing director for FBR capital markets.
And -- you know you I couldn't argue about that all we want Paul but why does it matter to our viewers right now.
Well I mean this is saying -- too big to -- not really I mean everybody really knows that.
I the government's made eight you know made me a decision and -- made a couple of years ago not to fail any of these big institutions they don't have the capabilities -- -- -- What they have done is -- lot of liquidity.
And nursed him through the crisis -- JPMorgan's one of the better companies out there to be run.
And Jaime diamonds -- the better -- out -- but.
This that there is say this comes -- too big to fail I think when you look at any of these giant institutions they are too big to fail and that's one of the big problems out there.
Especially.
Tell me if you agree with me on -- especially when you look at every street corner certainly in New York City -- three of them down sixth avenue here.
You see a chase depositor bank and of course they would have to be protected or did happened may have -- something happened with JPMorgan.
-- -- that and that's that's exactly right wean the politicians are there and the policy makers do not wanna get down that path unwinding when he's -- institution so what they're going to do is it gonna try to over regulate.
And I think what the concern is is here's one of the better -- out there and everybody was comfortable with.
Running institutions as complex as JPMorgan made a mistake was -- a giant mistake yes isn't a mistake that put this bank in danger no it did not.
But yet again as it is a concerning the state the fact that one of the best risk managers warning to consider when the best risk banks out there.
Was able to take these positions without a lot of understandings and go ahead and lose a couple billion dollars now this is a very strong bank it does not affect the core operations of the institution.
But it is a concern for regulators because like they said throughout the hearing today.
They're the ones at the pick up the tab is something really goes wrong with these institutions.
Exactly and you mentioned regulation we know more of that is coming and they will use this as an opportunity to say see.
But let's talk about that's something that perhaps is of great interest to our investors and that is the better option for their portfolios.
You like certain names out here what is your favorites that you feel are a little bit better position at the moment or at least are better buy for your portfolio.
Why was say this with a low -- with a low year curve where it is.
It's gonna struck all banks will struggle with the net interest margin that's that.
That's the margin may make -- putting loans out on the street right and because is not a lot of economic economic activity does not a lot of loan growth -- -- But -- names that were saying the bio once they have a large exposure to mortgage banking space right now wearing them awareness full blown every five boom going on out there.
Gain on sale mark disease of -- -- these are the margins were bank Barbara.
We like Wells Fargo.
Given the environment we're in right now.
Except for Wells Fargo you've got a 39 dollar price target an an outperform calls for PNC 68.
Dollar price target and an outperform as well you're not yeah.
So interesting to hear me here is say.
I like these because they have exposure of the mortgage market I mean three wind for years and it was away from them they have exposure to the mortgage market but he.
These extraordinarily low rates.
And the refi.
Activity is so attractive at this point that these are names that can do well.
I personally in the process of refinancing my rates are gonna go weight down -- my monthly payments are gonna go wake -- I've waited this long now in pulling the trigger what does that say I -- I'm -- genius when it comes to this -- a fun doing it in a lot others are.
Well right now you can go out.
Depending where your shopping around -- get a three and a quarter three F thirty year fixed rate mortgage that's a very enticing mortgage.
What -- they get I did not mention was a Bank of America or JPMorgan.
-- also of exposure to the mortgage market.
Because they're legacy books are so bad so you have to be careful you just can't blindly buy something because it's in the mortgage market you gotta look at the legacy side of this business.
There's still a lot of legacy mess out there that's costing a lot of money -- like we don't recommend a suntrust we do not recommend a Bank of America.
Because of their legacy books you have to find one -- has a relatively clean legacy book.
That's going to be -- it's crazy mortgage banks and that says means that we mentioned that is an excellent point know you guys see where JPMorgan is trading at 35 you lowered your price target from fifty to 37 I mean.
When's it gonna make that.
I could you know that thing about JPMorgan what we're concerned about as we don't really know that you earnings power company this we know it's a good bank we're gonna put that to -- -- They made a mistake but you know we you don't find other banks make mistakes on the road also.
But what we don't know is how much is division is CIO office contribute to profitability.
Over the last couple years.
A lot of people thought including ourselves and -- true earnings power JPMorgan six or seven dollars.
Which justified a fifty dollar price target that's what my price target used to date.
Now this thing is 20% -- profitability.
And the earnings of army ran for -- the -- -- so cheap at these levels so until we get more clarification -- where the earnings are.
With this office being effectively shut down you really buying JPMorgan is is Jessica gamble -- now.
Paul may we live in interesting times that you as a bank adolescent materialism -- that's how interesting are these times for you.
You know it was alive as more enjoyable you know seven or 8 years ago I -- I this is is going up believe me up.
Is is very difficult times for everybody.
Paul Miller of FBR capital markets is a managing director great to have you with come back again it looked -- them.
