Dick Bove: "It's Not The Bank's Fault They Are Not Lending, It's The Government's"

Dick Bove talked with FOX Business Network’s (

) Cheryl Casone this morning about the lack of confidence in the markets right now and how the slow recovery in Europe will affect banks in the US. He also addressed why Meredith Whitney is cutting earnings estimates for Goldman Sachs and Morgan Stanley after “everybody else has already cut their estimates.” Highlights of the conversation are included below courtesy of Fox Business.

“[The banks] are not lending because the government has decided they should have much higher capital ratios, because the government has decided they should have much greater liquidity… The banks are over capitalized. If they want the banks to lend money, they have got to back off on these capital rate requirements and these liquidity requirements. They have done this before and they’ll do it again. But it’s not the bank’s fault they are not lending it’s the government’s fault.”

“Businesses are so concerned about what their taxes are going to be, what their healthcare costs are going to be, what their financing cost are going to be, how they are going to get money from the banks that they just pulled back and the negative psychology is having a terrible effect on the economy.”

“Ultimately it has to. You can’t say the United States is isolated from the rest of the world and whatever happens in other financial markets will not affect the markets here. But if you try to riffle shot where the impact is going to be it is going to be primarily on the Big 5. Most of the regional banks are just not extended out to Europe. It will have a depressing effect on the overall financial markets but the impact is going to be very selective.

“Everybody else has already cut their estimates. It’s hard to understand why she waited so long. But she’s right. The earning for Goldman Sachs and Morgan Stanley are going to be dismal. It has been a terrible quarter for these companies.”

“Generally you find that analysts like to wait until the full quarter is over until they adjust their estimates.”