Bank of America Likely To Face $6 Billion Fine: Bove

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Bank of America Likely To Face $6 Billion Fine: Bove

Rafferty Capital bank analyst Dick Bove spoke with FOX Business Network’s (FBN) Maria Bartiromo during Opening Bell with Maria Bartiromo about the Justice Department seeking a mortgage deal with Bank of America Corp (NYSE:BAC) saying, this is “very significant in the sense that it is going to cost the bank a lot of money.” Bove went on to say, “I think it’s just prudent to assume” Bank of America will face a $6 billion Department of Justice Mortgage fine.” When asked what bank stock he would buy right now Bove said, “I would buy Bank of America right here. I think there are quite a few banks we like” and “this is going to be a very good year for bank earnings and therefore we want to play the area.”

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On the Justice Department seeking a mortgage deal with Bank of America:

“It’s very significant in the sense that it is going to cost the bank a lot of money. We don’t know exactly how much it will cost because we don’t know what the final resolution will be – how much is reserved against it and a few other factors, so you know I think it’s just prudent to assume it’s a $6 billion dollar pre-tax charge to second quarter earnings. Taking Bank of America Corp (NYSE:BAC)’s earnings from what might have been a 32 percent share profit to a 7 cent per share loss.”

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On whether the Justice Department seeking a mortgage deal with Bank of America came as a surprise:

“I think this is a surprise. I don’t think people were expecting a charge of this nature against the bank. In fact, if you go back a couple of months on Bank of America Corp (NYSE:BAC) – I think the theory was Bank of America had paid something like $50 billion dollars in fines and charges, etc. and they weren’t about to pay anything like that going into the future and now all of the sudden they are being hit with another charge and who knows how many more charges will come in the next few quarters.”

On what bank stock he would buy right now:

“I would buy Bank of America Corp (NYSE:BAC) right here. I think there are quite a few banks we like. I mean we like Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), we like Wells Fargo & Co (NYSE:WFC)…this is going to be a very good year for bank earnings and therefore we want to play the area.”

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