Bank Not Firing People Due to Looming Problems - Dick Bove
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Rafferty Capital bank analyst Dick Bove commented on recent commentary from Meredith Whitney that Wall Street could lose an additional 100,000 jobs. While Bove doesn't know if the predictions are accurate, he said the cuts will be out of strength not weakness.
Bove notes Banks are improving their profitability rather than seeing their fortunes dissipate, and jobs cuts would improve profits.
With the economy improving, albeit at a slow pace, bad times are not coming. "Bank earnings are at all-time record levels, Bove said. "Big banks are earning more money than the vast majority of companies in the United States, irrespective of the industry. Based on reported profits, one would have a hard time in making the case that this is not the best of times in banking. Based on the structure of bank balance sheets on Wall Street, and off, one is going to have a hard time arguing that banking is not about to show further major gains in profits."
He sees no basis for suggesting that banks are firing people because they fear the future.
"The net, net of all of this is that banks and securities firms may reduce employees but not because there is a looming problem," Bove said. "They are cutting employment because there is a looming benefit."
Bove notes Banks are improving their profitability rather than seeing their fortunes dissipate, and jobs cuts would improve profits.
With the economy improving, albeit at a slow pace, bad times are not coming. "Bank earnings are at all-time record levels, Bove said. "Big banks are earning more money than the vast majority of companies in the United States, irrespective of the industry. Based on reported profits, one would have a hard time in making the case that this is not the best of times in banking. Based on the structure of bank balance sheets on Wall Street, and off, one is going to have a hard time arguing that banking is not about to show further major gains in profits."
He sees no basis for suggesting that banks are firing people because they fear the future.
"The net, net of all of this is that banks and securities firms may reduce employees but not because there is a looming problem," Bove said. "They are cutting employment because there is a looming benefit."
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