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There's no point to "living wills" for banks, says Dick Bove. The wills, which are supposed to...

There's no point to "living wills" for banks, says Dick Bove. The wills, which are supposed to provide a blueprint for FDIC regulators to deal with banks when they go belly up, simply interfere with a process that has been in place for decades. “I don’t see what the purpose is of coming up with a new statement," Bove quips, "because we’re still going to do it the way it was done 50 years ago.”
Comments (8)
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    Does he mean that they should still be bailed out? He is clueless.
    3 Jul 2012, 04:32 PM Reply Like
  • kjangelo
    , contributor
    Comments (102) | Send Message
     
    Dick is far from clueless. He is absolutely correct.
    3 Jul 2012, 04:40 PM Reply Like
  • faustius
    , contributor
    Comments (461) | Send Message
     
    Really? The FDIC is going to unwind Barclays, Credit Suisse, Deutsche Bank, and UBS if they get into trouble, just like Bove says? I think Europe might take issue with that.
    3 Jul 2012, 10:18 PM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    A foreign bank that controls a U.S. bank subsidiary, but has no branches or agencies, can elect to become a financial
    holding company if its U.S. depository institution subsidiaries meet the criteria described above. A foreign bank that has a
    branch or agency in the United States—but no U.S. depository institution subsidiary—may also be “treated” as a financial
    holding company in order to expand the range of its financial services in the United States.

     

    To do so, the foreign bank, in making its election, must demonstrate that the foreign bank itself meets “well capitalized” and “well managed” criteria, which the Fed believes to be “comparable” to those required of U.S. bank subsidiaries of U.S. financial holding companies.

     

    If a foreign bank controls a U.S. bank and has branches or agencies, its depository institution subsidiaries must meet “well
    capitalized,” “well managed” and community reinvestment criteria and the foreign bank itself must meet comparable “well
    capitalized” and “well managed” criteria.

     

    That being said, the Foreign Bank Supervision Enhancement Act of 1991 (“FBSEA”) consolidated Federal regulation of foreign banks by the Fed, though Federal branches and agencies remain primarily regulated by the OCC, and insured state branches remain
    primarily regulated by the FDIC. There is also extensive state regulation of foreign banks, with bank regulators in New York,
    California, Illinois and Florida being the most prominent, because of the extensive scope of foreign bank operations in these states.

     

    Foreign bank branches and agencies
    State licensed: Fed/FDIC (insured)/state
    Federally licensed: OCC/Fed

     

    Finally, FBSEA prohibits ANY branch of a foreign bank from applying for Federal Deposit Insurance. The few branches of foreign banks that had obtained FDIC insurance before FBSEA were allowed to maintain that insurance (12 insured branches remain under this authority). A foreign bank that wishes to accept insured deposits may do so now only by acquiring a separately chartered U.S. bank or savings association subsidiary.

     

    See GAO FED Audit pgs. 130-131 for a list of the banks who are owned (de facto) by the FED, among them ALL the banks you just mentioned, ALL of them.
    6 Jul 2012, 04:19 AM Reply Like
  • faustius
    , contributor
    Comments (461) | Send Message
     
    I don't believe you understood what I found difficult to believe in Bove's statements. I know foreign banks operating in the U.S. have to comply with a bevy of federal and state regulations.

     

    At issue is a particular requirement in the Dodd-Frank legislation that requires nine global financial institutions, five of which are the European banks listed above, to submit a plan of action to the FDIC, in the event they failed. Dick Bove claimed that these institutions could be handled by the FDIC the same way as a domestic regional bank.

     

    The idea that Germany, the EBA, and the ECB would idly sit by and watch Deutsche Bank (for example), go into receivership in the U.S. under the auspices of the FDIC, and U.S. courts seems difficult to believe.

     

    As to your last point, wow. I never actually dug through the audit, and thought some of the more extreme claims in the media were overblown. I guess not. $16 trillion in interest free loans are staggering. Obviously, the real plan of action for these institutions is "we'll just have the Fed print us up a few more trillion dollars".

     

    So where did all these funds go? If that much money ever landed in the real economy I'd need to buy a wheel barrow to go grocery shopping.
    6 Jul 2012, 07:19 AM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    Bove's statements are as usual provocative, much of the same maniacal retrospective as Cramer & Co., with less foaming at the mouth, he enjoys the sound of his own voice.

     

    The institutions will continue to be regulated by their creditor, the FED.

     

    If he was truly talented, he would be involved in Policy, he is a mere distraction.
    7 Jul 2012, 10:03 AM Reply Like
  • Pwdrskir
    , contributor
    Comments (135) | Send Message
     
    2008 - Congress voted to give $780B to bail out banks. This was clearly not "the way it was done 50 years ago".

     

    I would like to know Specifically what the hell he is talking about...
    3 Jul 2012, 08:47 PM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    Bove's comment was a vain attempt to make himself sound like a tough guy.

     

    He said "we".

     

    HE runs NOTHING, he is a standup analyst. Watch ANY interview with him.

     

    FED is calling those shots, they are the creditor.
    6 Jul 2012, 09:10 AM Reply Like
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