Why would anyone listen to Dick Bove?


Bove says financial crisis over, buy banks
Bear Stearns collapse was trigger for U.S. authorities to take drastic action
By Alistair Barr & Riley McDermid, MarketWatch
Last update: 1:37 p.m. EDT March 20, 2008
Comments: 55
SAN FRANCISCO (MarketWatch) -- The financial crisis is over, giving investors a rare chance to buy bank stocks at attractive valuations, Punk Ziegel & Co. analyst Dick Bove said Thursday.
During crises, problems reach a crescendo when even the most optimistic market participants become fearful. That usually prompts government and business to join forces on a big solution that may either work or fail, Bove said.
The collapse and near bankruptcy of Bear Stearns Cos. (BSC:
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BSC, , ) last week was the trigger for the current crisis, pressing President George Bush, Treasury Secretary Hank Paulson, Federal Reserve Chairman Ben Bernanke, President of the Federal Reserve of New York Timothy Geithner and key industry executives into emergency action, the analyst said.
"The actions taken by the Federal Reserve were innovative, dramatic and, in my view, brilliant because they went right to the problem," Bove wrote in a note to clients. "The actions being taken by the Federal Reserve are being mirrored by the Treasury, which now has finally grasped the scope of the problem."

"Richard Bove at Ladenburg Thalmann has a different take on who may be next. In a report, he looks at all the FDIC-backed institutions, comparing each bank’s bad loans to its overall assets through two ratios. First, he divides the “non-performing assets” of an institution--bad loans, late loans, foreclosed assets--by all of its outstanding loans. “A radio above 5 percent suggests danger.” The overall industry ratio is below 2 percent. That’s good news. But it’s not so good for individual names like Downey Financial DOWNEY FINL CORPDSL
1.28 -0.41 -24.26% NYSE


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[DSL 1.28 -0.41 (-24.26%) ], with a 13.86 percent ratio (on Sunday, Downey Financial reported its non-performing assets were over 14 percent, up from 1 percent a year ago