Posted by Andrew Lipsitz
Written by Robert Holmes
NEW YORK (TheStreet) -- Most bank stocks, including JPMorgan Chase (JPM Quote) and Wells Fargo (WFC Quote), traded lower Friday, continuing the recent slide spurred by Treasury Secretary Timothy Geithner's remarks on the creation of a consumer finance protection agency. On Thursday, Geithner told Congress that he supports a plan by Rep. Barney Frank (D., Mass.) that would pare back some of the original plan presented by President Obama but would still retain the consumer protection agency despite heavy pressure from banking industry and some lawmakers to eliminate it from the legislation.
Rochdale Securities analyst Dick Bove argued that the proposed plan raises the possibility that the banking system will now be dominated by government edicts. He said this will lower bank profitability and inhibit industry growth.
"The government is surging into the banking industry under the theory that it better understands banking than the private sector does," Bove wrote in his research note. "The result is likely to be fewer bank services provided at higher prices and ironically lower banking profits. Consumer finance could easily become a set of products banks may not want to provide to large sectors of the population. This will create a number of opportunities for everyone but the banks."
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