DICK BOVE: IT'S QE3 TIME, UNLEASH THE BANKS!Joe Weisenthal | Jun. 3, 2011, 9:21 AM
Unleash The Banks is the title of a fresh note out from outspoken bank analyst Dick Bove.
He says the NFP disaster confirms the need for more stimulus, but that there's a way to do it without using more government powder.
He claims that the Fed could unleash all the Net Free Reserves held by banks. What would get this going?
Says Bove:
Well, it is clear that there is a huge amount of money available to the economy if the $1.486 trillion in net free reserves is released into the economy. Net free reserves are currently 2.5x QE2. They would constitute an enormous QE3 if released and it would not require any new Federal Reserve or Federal government program. The money is sitting there fallow stimulating nothing but payments on government debt.
What would it take to get this money into the economy?
Tax incentive programs that would stimulate capital spending and/or job growth by the government. A reduction in the stringent regulations now being applied to the banking industry.
The American economy has functioned without assistance from its banking industry for the past 2 1⁄2 years. It may need this assistance now. The money is there it simply needs to be made available
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