Although there is not an openly avowed socialist in the White House yet, one banking expert told CNBC “we’re well on the road to socialism.”
Richard Bove, vice president of equity research with Rafferty Capital, did not mince words on CNBC’s Squawk Box Oct. 12, and he criticized government meddling in the banking system.
After co-host Andrew Ross Sorkin asked Bove about the Highway Safety legislation working its way through Congress, Bove said, “The government has taken the position that because they offer FDIC insurance they have the right to invade banks.”
CNBC.com explained that the “bipartisan” bill would reduce dividends from the Federal Reserve to banks from 6 percent to 1.5 percent and direct the difference to highway projects.
Bove described it as “not only setting very tough regulations concerning how the banks function, but in the Highway Safety bill, what they’re doing is they’re saying ‘we’re gonna take some of the revenues from the banks and we’re gonna use them to repair highways.’”
“I believe the banks have been nationalized, I believe we’re well on the road to socialism, in terms of the way we’re taking money flows out of the banking system and putting it into the government,” Bove declared.
He criticized this possibility saying, “That’s not what it’s supposed to be there for.”
“People who put their deposits, put their deposits in the bank because they expect that money to be loaned to someone else, and they expect to get a nice return on the deposits. That’s not happening,” Bove said.