October 4, 2012
SHOULD BANKS AND INVESTMENT HOUSES LEAVE MANHATTAN FOR LESS LITIGIOUS REGIONS?
Banks should consider leaving New York City to escape ongoing lawsuits and a general lack of support for the industry and consider moving to more business-friendly states like North Carolina, said Dick Bove, a noted banking analyst from Rochdale Securities.
New York Attorney General Eric Schneiderman recently filed a civil fraud lawsuit against JPMorgan Chase concerning securities sold by Bear Stearns, which JPMorgan bought in 2008.
The lawsuit claims that Bear Stearns failed to ensure the quality of loans forming part of mortgage-backed securities it sold in 2006 and 2007.
Banks have been subject to a slew of high-profile lawsuits in the past, including under former New York Attorney General Eliot Spitzer.
“Management should consider the benefits of moving their headquarters elsewhere. Shareholders should not be forced to pay for continuous lawsuits because these banks are in New York,” Bove wrote in a note to clients, according to the Charlotte Observer.
“If the industry was located in Charlotte, North Carolina it would not be facing constant hostility it would be supported by a government that wants its business.”
Investment firms abandoning their New York headquarters would also make the Occupy Wall Street crowd happy — but as with the collapse of the auto industry presaging Detroit’s overall implosion, they should be careful what they wish for.