Apr 16, 2010

Dick Bove on Goldman Sachs' over-capitalized balance sheet

Let's assume that the firm is charged $1 billion, for whatever reason, the decision is made that this firm must pay $1 billion to solve this problem. That will lower their capital somewhat, it will inhibit their ability to grow their balance sheet, but you have to remember the company is over-capitalized at the moment and it's not growing its balance sheet at the moment because it doesn't use its balance sheet any longer as a driver of earnings. So, again, it'd be a significant, one-time charge... it would not inhibit or hurt the company's long-term growth and after the payment was made Goldman Sachs would still be out there doing business the way it traditionally does. And I think it's a superior firm and therefore if this stock goes down meaningfully as a result of this information, I would aggressively buy it.

~ Dick Bove, Rochdale Securities, CNBC, April 16, 2010

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