Dick Bove says "banks could lose $80B", I say so what.

Discussion in 'Wall St. News' started by S2007S, Oct 15, 2010.

  1. S2007S


    Is this guy serious, does he really believe the banks could "LOSE" $80 billion, how many hundreds of billions did they lose during the biggest credit crisis in history, banks were bailed out once before and they will be bailed once again, $80 billion, $800 Billion or even $8 Trillion, it doesn't matter, they will get another round of bailouts so that this passes just as the last crisis passed. They will do what ever it takes to settle this problem and not a single person will have a care in the world why the banks keep getting free bailouts. This economy and the people haven't learned anything from this credit crisis.

    Banks Could Lose $80 Billion From Mortgage Mess: Bove
    Published: Friday, 15 Oct 2010 | 12:26 PM ET
    Text Size
    By: Jeff Cox
    CNBC.com Staff Writer

    Banks could face losses of over $80 billion from the foreclosure mess—not so much from the moratorium on home seizures but from the flood of homeowner and investor lawsuits likely to follow, analyst Dick Bove said Friday.

    The major issue for banks this quarter is that core earnings are going down for the industry, said Richard Bove, financial strategist at Rochdale Securities.

    The lawsuits are likely to focus on "fraud at every level of the process"—from packaging mortgages into bonds to selling them to investors, the Rochdale Securities analyst said in a note to clients.

    The legal fallout could cost the industry more than $80 billion, about 10 times the amount that Bove sees banks losing from the foreclosure halt itself.

    "[H]uge amounts of monies have been lost and there are very angry participants at every level of the system seeking to recover the funds that they have lost," Bove wrote.

    Financial stocks continued to get hammered Friday by growing worries about the fallout from the foreclosure mess. The KBW Bank Index [BKX 45.47 -0.87 (-1.88%) ] was down 3.3 percent.

    S&P Equity cut Bank of America [BAC 12.0104 -0.5896 (-4.68%) ] to "hold" from "strong buy," saying the big bank is not as prepared for the fallout from the foreclosure crisis as JPMorgan Chase [JPM 37.54 -1.18 (-3.05%) ]. S&P also cut its price target for BofA to $14 from $17 as shares of the bank hit a 52-week low.

    Earlier this week, attorneys general from all 50 states launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners. The move deepened worries that the use of so-called "robo-signers" to stamp mortgage documents could backfire on banks and lead to fines. Many banks have already voluntarily halted foreclosures while they look into the problem.

    The growing mess has sparked fears that U.S. banks' tenuous profitability will be wiped out as they repurchase billions in home loans held by investors in mortgage-backed securities.

    "This is a potential cost to factor into long-term profitability," said Jefferson Harralson, Atlanta-based bank analyst with Keefe, Bruyette & Woods "We have to understand banks could be dealing with this on a loan-by-loan basis for years."

    Bank of America, the country's largest mortgage servicer, could be forced to repurchase as much as $74 billion in mortgages, according to one estimate by Branch Hill Capital.

    "The housing crisis is not over," Bove said. "It has been extended. If the extension is too long everyone will be harmed. The entity harmed the most will be the homeowner making payments on his/her mortgage."

    Bove noted that the inability to foreclose will hurt banks somewhat, but will injure homeowners more through declines in property values. When those homes subject to the moratorium come back into the market, the overabundance of supply will cripple prices and send the already-beleaguered market into another tailspin, he said.

    "The combination of the moratorium and the lawsuits are likely to cause the major mortgage originators to withdraw from the markets while they deal with their problems. There is no one to replace them," he wrote. "This could cause the rates on mortgages to rise, further depress home mortgage prices, and increase foreclosures."

    Housing stocks were reacting to the foreclosure crisis Friday, losing more than 1.5 percent in morning trading.
  2. So people with low income and struggling even to put down the 3%, now want to sue the banks because they are not paying their monthly mortgages?

  3. Multiply by 1,000. :eek: :( :mad:
  4. Of course. And if you go back an listen to what Maxine Waters was pushing on CNBC the other day, these people should have free homes!

    It was massive "collusion and fraud" by the banks to take advantage of the poor, according to her.
  5. I have read that once a person stops paying their mortgage, it can take a year or two to evict them from the home. This new "crisis" will almost certainly prolong the process even longer. How many people do you think are living in homes that are worth less than the mortgage balance, in addition to being up to their eyeballs in credit card debt and unemployed who now plan to live for free in their homes for as long as possible? I would say that the number is growing rapidly.
  6. Well these little "dead beat" borrowers have a big RICO stick in their hands.. class action suit seeking treble damages, title plus voiding of the note and all costs and legal fees on the basis of mail fraud.

    Not only are the banks as an entity at risk but each person affiliated or employed is potentially personally on the hook. Appraisers, Bankers, Brokers, Lawyers the entire chain gang. Just one conviction means they lose their licenses. These lawsuits are at the Federal Level... both as civil and criminal proceedings. Once they start the entity is pretty much tied up legally and will be bankrupted by their lawyers who are really the only ones standing to actually get paid.

    Racketeering is serious...
  7. ammo


    this crime goes all the way to bush,bernanke ,the fed ,they've kept it hidden for this long, they will find a way to cover it up,the secret is whatever they told the house and senate to release the first bailout cash
  8. the1


    Sounds like the economy is going to be just fine after all. All those tradesmen can go back to work building prisons.

  9. I suppose an interesting angle to stop paying a mortgage is to state the loan and documents are part of a racketeering crime. Any further payment could be construed as aiding and abetting said crime therefore until a court order is issued determining all original documents, riders, titles are in order I am withholding making any further payments.

    File suit stating such claim and file for a quick claim deed for title to your property. Let them defend the charges for a few months and have them submit to the court all of the original signed agreements and amendments. (One of which only you have copies to signed by a loan officer Donald Duck from one of the flips along the way).
  10. Dick Bove has played these banks like a violin. He called the bottom, he called the top. He is one of the few that have any credibility with his banking calls.

    How many of those yo-yo's on CNBC were pounding the table to buy JPM in the high forties or BAC at twenty? How many were saying "don't buy financials in March of 09?

    Is he right on this call? Time will tell, but I wouldn't take the other side of his calls.

    Now Cramer on the other hand :p well nuff said.
    #10     Oct 16, 2010