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Rafferty Capital Markets analyst Dick Bove on the investigation of JPM losses related to the London Whale.
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So it just wasn't a great week for JPMorgan in addition to today's -- interrogation yesterday the Fed rejected its capital plan it wasn't the only one Goldman Sachs also.
-- must improve capital planning meanwhile sixteen other banks got the go ahead.
Four combined thirty billion dollars in share buybacks joining me now in another fox.
-- a banking analyst Dick probate -- great to have you back on the show.
Give me your reaction what Sheila just sad.
Well I think that the banks massively over regulated I think that they have a massive amount of excess capital and -- gonna go back to 1938.
Defined the year in which the capital as a percentage of -- -- in the banking industry.
Is as high as it is today I also think that this whole concept of trying to break up banks is.
Anti if you will global financial Americanism or what have you and a college.
To look who is JPMorgan.
JPMorgan is a company.
Which makes more money.
Than virtually any other company in the United States no matter what the industry and is only five companies in this country that make more money than JPMorgan.
It is the bank that makes the most money of any bank in the world except for three to three Chinese banks -- so we're talking about a massively successful company.
And always hearing is that it's too big to manage what what to people expected integrity to do.
I got a fleet average you just said about 6000 interesting things that we have to sort of breakdown let me start with the idea that you said that they had their massively over capitalized -- too much capital of course.
You know the Federal Reserve just came out so they have to make a different capital plan to totally disagree with you.
And -- send it but the last 75 years.
Banks have had less capital as a percentage of assets than they have today.
And that did not cause a massive problem in the US economy it did not because the breakdown of the financial system.
For some reason for 75 years these banks never needed.
Nor did the economy need -- did the financial system need for these banks to have more -- -- Not a totally insulated from a shock I mean that was one of the points that came out of the Fed yesterday is they said that they are they are not -- -- -- insulated.
-- -- -- -- Not.
There's no I don't disagree I don't I don't I think that.
You know this pollyannish view that you can pass a series of laws -- set up.
The series of regulations which turn around seven years 700 years of economic history is is -- source of the problem.
-- and in other words you know you cannot stop.
Bank failures you cannot stop.
Financial crises they will continue.
To -- You can maybe tomorrow and I'm -- -- art capital is headed due to trip what is the danger all the intimate capital is just make an -- -- what I economy.
Welcome who first you know every major bank that failed was over capitalized according to the rules at the time.
No there was none of the banks that failed Washington Mutual national city compass none of these kind.
None of these banks what -- judged at the time by Sheila -- or anyone else.
As having been under capitalized right.
They were considered to be.
More than adequately capitalized so that tells you that it's not capital because of bank to fail it's a lack of cash flow it's a lack of liquidity they don't talk about liquidity -- cash flow but that's what turns any company to fail.
OK meanwhile JPMorgan has become the favorite whipping -- way in Washington and also you don't for shareholders and some outsiders.
There has been this call from unions and others break -- the chairman and a CEO role let me play for -- what Jamie Dimon said reaction about that you talk about on -- the -- but let's.
It's.
My -- wants everyone equal to lead director we -- the presiding director of the not sustain above.
At any point time my board to eleven members of the six too far to dictate the chairman of the continue to shield achieve the presiding director of leader that's the way -- big.
Do you agree with -- do you think does -- be broken -- do you think that he's just getting beaten again and again and again for this well thank.
No no I think they should definitely be broken out by -- I don't agree.
Mr.
chairman and and that the US CEO should be the same person.
And even though I think the Jamie Dimon is probably the best manager -- close of being the best manager of a bank in the United States.
I don't believe he should have both roles of chairman and and CEO I think there has to be regulation.
Banks both internally -- -- Supposedly the board of directors and externally which is all of these agencies that wanted to sleep before 2008 and didn't do their jobs.
All right Dick a -- bush get more time thanks coming -- -- -- -- -- in.
Thank you time now for --
