As apparently everyone seems to be doing today, Dick Bove is giving his two cents on Obama’s scheduled speech today on financial regulatory overhaul, and calls the government’s thinking over the past year, “fuzzy.”
From Bove’s report:
As part of this speech he is believed to support the idea that banks should not be too big to fail. This leads one to think about the actions of the government to increase money supply on one hand and shrink banks on the other. There seems to be an inherent conflict here.
Bove’s stance is that while banks are restraining the growth of money while the Fed is pumping its supply, banks are, therefore, preventing an economic recovery because they are not lending enough and the government is doing the exact opposite of what it is advocating.
If the banks are forced to shrink further will they be able to lend more? it reasonable to cut back the shadow banking market and expect the money to get to the economy? Small banks are dying at the rate of 5 to 8 a week and have done so for 25 years. Are they the solution to getting money to the economy?
Bove says that the fact that the government keeps expanding the money supply and demanding that banks lend more, while wanting smaller banks and more rational lending policies is proof that it has “not thought out what it really wants.”
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