Why the Banking Crisis Is Over, Says Top Analyst in the Long Term Sector

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The banking crisis is over.

That’s a somewhat surprising message from Dick Bove, the OG banking analyst who rose fame with his bold calls at the height of the 2008-2009 crisis.

“I think the near-term banking crisis is definitely over,” the financial analyst at Odeon Capital Group said on Yahoo Finance Live (video above).

Bove’s call prevent a wider crisis in the financial system is rooted in his interpretation of recent events.

On Thursday, 11 US banks led by JPMorgan (JPM), Bank of America (BAC), and Citigroup (C) banded together infuse $30 billion in uninsured deposits into lender First Republic (FRC).

The move follows a sharp fall in the share price of First Republic, which was the nation’s 14th largest bank by assets of $212 billion as of December 31.

“I think if you go back in history, you know that before the Federal Reserve was formed, this is what was done maintain stability in the banking industry,” Bove explained. “The banks would come together and basically share the money and bail out the problem company. The big event in 1907 that eventually led to the Federal Reserve was when J.P. Morgan considered all the bankers in his house, closed the doors, and Said you can’t leave until you solve this banking crisis. And they solved it.”

He added: “And then in recent times, when that mutual fund went down [in 2008], The same thing happened. Everyone put in the money except for Bear Stearns, which declined do so. And so we’re seeing it happen again. And it works.”

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People are seen inside a First Republic Bank branch in Midtown on March 13, 2023 in New York City, New York, US. Reuters/Mike Sager

be sure, the past week has been one for the history books in the banking sector.

Late Wednesday, Credit Suisse (CS) said it would tap nearly $54 billion from Swiss regulators as its own internal crisis spilled over into the public markets.

And just a week earlier, the collapse of Silicon Valley Bank marked the second largest bank failure in the US, behind only Washington Mutual during the Great Recession. The demise of Signature Bank (SBNY) was the third largest bank failure in history.

The turbulent situation has caused regulators act to prevent a banking crisis and the massive tech layoffs that are likely to happen if left unchecked.

Collective action around the world has stabilized the broad equity and bond markets. But not everyone is ready give signals as clear as Bove’s.

“We shouldn’t get ahead of ourselves, and it’s worth remembering that we already had a temporary period of stability on Tuesday following concerns from Credit Suisse on Wednesday,” Deutsche Bank strategist Jim Reid said in a note. Was impressed.” on Friday.

Brian Sozzi is the executive editor of Yahoo Finance. Follow Sozy on Twitter @BrianSozzi and on LinkedIn,

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