Investors dumping U.S. bank stocks are overreacting to all the European debt-crisis speculation, Rochdale Securities’ Dick Bove told me last night on The Kudlow Report.
“I think we’ve gone nuts,” he said. “I think [U.S. bank] stocks are so cheap, that people should be buying them as aggressively as they could.”
The financials led the S&P lower Tuesday after investors fled the market on fears that the European debt deal could fall apart. After reports conflicted on whether Greece plans to hold a referendum on the debt agreement reached last week, the government jumped in to say the vote is on.
But what’s happening in Europe should not affect U.S. banks, Bove said, because most have virtually no exposure to the European Union. Plus, most banks beat their earnings estimates for the third quarter.
As for the “five big American banks” that do have exposure to Europe, their risk is “not very great at all,” he said. That’s because Bove believes the EU will not let its banks fail.
“The ECB will do, if you want, a QE2,” he said. “It’s going to save all of the major European banks. It’s already shown its will to do so.”