Dick Bove Loathes Obama's Rumored Refinancing Bailout
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President Obama's rumored refinancing bailout plan was slammed today by Rochdale Securities' Vice President Dick Bove.
President Obama's plan for homeowners who are currently paying the same mortgage rate in which they received when the economy was strong back in the day, would be allowed to switch near the current 4 percent level. Mr. Bove notes that this will result in additional charges for both taxpayers and the banking industry. Supporters of the plan believe that it will help ease the mortgage problems and generate consumer spending.
"It is a classic example of how badly the people who are supposed to understand banking do not have a clue as to how it works," said Bove. "They love to pass laws and new regulations but they do not care nor do they understand what these regulations will do. Then they get frustrated when the simplistic monetary theories they put in place do not work."
Roughly 1 in 4 homeowners owe more on their home than is it worth in the market.
Mr. Bove states that the $85 billion in estimated savings would actually just come as costs to taxpayers who subsidize government sponsored agencies such as Fannie Mae and would result in a loss of revenues for banks due to the refinancing.
"The point that neither the administration, the Treasury, nor the Fed can seem to understand is that they have strangled bank lending with their capital and liquidity rules and their price fixing requirements," states Mr. Bove.
Mr. Bove believes that if the government relaxed its capital requirements on banks and allowed rates to move that it would end in the same result.
"The biggest failure is that these people are still working on consumption rather than production programs," he said. "Until they figure out that more production is what is required we will continue to take money out of one pocket and put it into another and assume that we have accomplished something."
President Obama's plan for homeowners who are currently paying the same mortgage rate in which they received when the economy was strong back in the day, would be allowed to switch near the current 4 percent level. Mr. Bove notes that this will result in additional charges for both taxpayers and the banking industry. Supporters of the plan believe that it will help ease the mortgage problems and generate consumer spending.
"It is a classic example of how badly the people who are supposed to understand banking do not have a clue as to how it works," said Bove. "They love to pass laws and new regulations but they do not care nor do they understand what these regulations will do. Then they get frustrated when the simplistic monetary theories they put in place do not work."
Roughly 1 in 4 homeowners owe more on their home than is it worth in the market.
Mr. Bove states that the $85 billion in estimated savings would actually just come as costs to taxpayers who subsidize government sponsored agencies such as Fannie Mae and would result in a loss of revenues for banks due to the refinancing.
"The point that neither the administration, the Treasury, nor the Fed can seem to understand is that they have strangled bank lending with their capital and liquidity rules and their price fixing requirements," states Mr. Bove.
Mr. Bove believes that if the government relaxed its capital requirements on banks and allowed rates to move that it would end in the same result.
"The biggest failure is that these people are still working on consumption rather than production programs," he said. "Until they figure out that more production is what is required we will continue to take money out of one pocket and put it into another and assume that we have accomplished something."
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