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

Category: Analysts, Bailouts, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “FBR’s Paul Miller, Banking’s Latest Cheerleader”

  1. WFTA says:

    Why is the term “self serving shill” echoing around my empty skull?

  2. DeDude says:

    I agree with Miller that poorly run banks that are being punished for previous wrongdoing may face huge loses and as a result be more reluctant to lend to new home buyers. But is that a bad thing? Supposedly in a free market capitalist system there will be other much better run banks who are not facing loses and who would be ready willing and able to do what the others will or cannot do?

    On the other hand, if both those banks facing uncertainty and a drain on capital, and those not facing it, are reluctant to lend, then maybe the uncertainty has nothing to do with the reluctancy to lend. Last time the public gave huge sums to banksters for the purpose of getting them to lend freely again it didn’t seem to have the desired effect. So I say this time we should hold on to the public demands on BAC and other banksters and then go Swedish on them if they don’t have the money to survive paying for past sins.

  3. AHodge says:

    i would like a functioning credit system
    it is not possible to argue the answer is free pass for all bank bad accounting and past transgressions when
    1 the banks dont believe each others lying accounting
    2 The FDIC and Fed are not allowing ANY NEW BANK ENTRY

  4. Concerned Neighbour says:

    Yet another stand-up banker.

    And as I predicted last night with futures down 2.7% or so, buyers would rush in out of nowhere to save the market. We’ve seen this pattern so many times over the last two years. Sell the bad news in the morning, and then a miraculous intraday recovery on no news.

    I’m not one to go in for conspiracy theories generally, but Barry I would be very interested in your thoughts on this pattern. Who is doing this intraday reversal buying? And why does the market so often end the day with a sharp spurt up (see today’s chart for an example).

  5. ashpelham2 says:

    Concerned, I’ve noticed it too, through the past couple of years. I think there is a lot to be said for education. By that, I mean that investors, both big and large, have learned that they can build small incremental gains on down days. Wonder how many days we have had that swung from a 2% or better GAIN at the opening, to an even larger gain by close? Not as many people know how to play that, and a smart investor knows that buying into an overbought market, be it daily, weekly, or longer term, is a way to minimize return.

    However, good investors know when something appears oversold. I”m not saying this market is one way or the other, GENERALLY speaking, but on a given day, a sharp drop at open, or by mid-day, is a nice opportunity to buy companies or industries that were caught up in the sell off. Rinse and repeat.

    Long term takes too long. Short term fulfills our needs for instant gratification.

  6. willid3 says:

    so the banks aren’t interested in making loan. thats not how they make money any more, its the fees. and people and business aren’t interested in taking out loans either. they don’t have the need for it. one of the ‘features’ of a credit bubble, is that demand has been pulled forward. in this case it might be a few years (or decades) before demand returns. whats really odd is that the banks and wall street (the perpetrators) knew this when they were creating that bubble. but oddly enough the rest of the businesses had no clue about it

  7. AHodge says:

    so like willi above says we have a bunch of guys who dont want to do banking anymore
    but the FDIC/ Fed not allowing in anyone new who might actually want to do bank lending
    the argument is they have to preserve spreads
    so the old legacy losers can earn their way out

  8. AHodge says:

    why earn your way out w loans when you can maybe earn your way out
    with free money funding nearly infinite treasury repo

  9. Tarkus says:

    I was able to rephrase that argument to be “If we make them obey the law it will hurt the economy.”!!

    I can have a beer!! :-)

    I can rephrase Dick Bove’s that way too!!

    I can have another beer!! :-)

    I think their argument is actually for having them obey the law/prosecuting them for offenses, and then nationalizing the banks if they are too weakened by that. Am I interpreting that correctly??

  10. lo574 says:

    Clearly their huge bonuses are not impeding their ability or willingness to loan. I am so relieved [sarcasm intended]

  11. Frilton Miedman says:

    “drain capital from the banking system, and they cause banks to overly tighten credit standards, which pushes potential home buyers onto the sidelines.”

    With consumer debt at an all time high, while wages are stagnant and real unemployment over 16%, even though housing prices seem ludicrously cheap, yet no one is buying, I think it’s idiotic to assert we ought be worried about lending standards tightening when it’s obvious no one wants to borrow anyway.

    Focusing on housing or credit is like a doctor focusing on minor abrasions for car crash victim who came in with internal bleeding.

    Housing prices are a symptom of diminishing demand (and wholesale fraud by the banks and ratings companies) for an economy that has bled GDP in globalization for 30 years while placating living costs with credit & home equity instead of real wages.

  12. b_thunder says:

    ‘”U.S. government-backed firms and agencies should “stop punishing banks” and suspend demands for mortgage repurchases because they are impeding an economic recovery’ – really? As in let the trillion-dollar fraud do unpunished while sucking up taxpayers’ money to bail out the perpetrators?

    By the same logic Bernie Madoff should have received TARP bailout so that he could satisfy redemptions in late 2008 instead of going belly-up because the news about the Madoff’s Ponzi “impeded economic recovery” by lowering investor confidence!

  13. eurostoxx says:

    there is an article in the Economist with a similar tone. Fannie and Freddie should be trying to help fix the housing SYSTEM not just their books (which are the tresuries now anyways)

    Should BAC and other pay, sure, I agree. But hit them up when the economy is doing better. All this negativity is just plain stupid for a fragile economy. Policy makers stand up!

    Lets kill BAC and then see what GDP is like

    I expect more from this blog that just ZH hating

  14. Fireman1979 says:

    The enemies and wars that we are fighting in Iraq, Afghanistan and Libya may be the wrong wars. The real enemy is the financial experts who have secretly seized our regulatory, legislative, executive and judicial offices. There is a war going on but the bankers and financial experts refuse to acknowledge that it is called , “class warfare.” We will implode from within. I will have to rewatch “The Manchurian Candidate.”
    If our Supreme Court said that corporations have status as individuals, why shouldn’t they punished like individual citizens?

  15. DeDude says:


    These banks have had 3 years to recover, pay for their mistakes (legal or illegal) and get back into doing what they are supposed to do for society. If they are still not strong enough to do their jobs then it is time to “retire” them and let new fresh blood take over. If they are just sitting there like dead wood trying to catch their breath they are holding the rest of society back – and that is just not acceptable. They need to get moving or get the hell out of the way. So yes lets kill BAC; Barry has a reasonable plan for that.