FBR’s Paul Miller, Banking’s Latest Cheerleader

Today’s Dick Bove wannabe is the once respected Paul Miller of FBR Capital Markets & Co.

In a note to clients that revealed a stunning ignorance of fiduciary and legal obligations, Miller said FHA, FHFA, and GSEs were “acting in their own self-interest as opposed to that of the broader U.S. economy.” The details of the note was reported on by Bloomberg.

Banking analyst Chris Whalen critiqued the position, stating, “Miller has gone to the dark side. Things are looking so bad for BAC, that Miller is starting to actually sound like a sell side analyst.

Whalen said that despite receiving billions in bailouts, the large public banks may be required to undergo major restructuring eventually. If MBIA and/or GSEs win in court, it could force the issue.

Whalen added “Rather than doing this piecemeal through litigation, we should use the power of receivership to organize this process, treating all banks fairly.”

Here’s Bloomberg:

“U.S. government-backed firms and agencies should “stop punishing banks” and suspend demands for mortgage repurchases because they are impeding an economic recovery, according to Paul Miller of FBR Capital Markets & Co.

Repurchase losses may total $121 billion, wrote Miller, a former federal bank examiner, in an analyst’s note to clients dated today. He previously said the tally might range from $54 billion to $106 billion. Losses for Bank of America Corp. (BAC) could reach $66 billion in some scenarios, he wrote.

Fannie Mae, Freddie Mac, the Federal Housing Authority and the Federal Housing Finance Authority “are acting in their own self-interest as opposed to that of the broader U.S. economy,” Miller wrote. Their claims “drain capital from the banking system, and they cause banks to overly tighten credit standards, which pushes potential home buyers onto the sidelines.”

Its a race to the bottom between European and American banks, with analyst integrity the collateral damage of the pending financial rout . . .


U.S. Must ‘Stop Punishing Banks,’ Halt Putback Claims, FBR’s Miller Says
Hugh Son
Bloomberg, Sep 6, 2011

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