and we have a very respected dick bove. he's going to give the analysis of the stress tests coming up. "fast money" starts right now. we're live from the nasdaq market site in new york's time square. i'm standing in for melissa lee for the next three days. you're stuck with me. >> awesome. >> sorry. well, we have our traders here tonight. tim seymour, steve grasso, karen finerman and guy adami. it was an ugly day on wall street, right? the major indices across the board, with the nasdaq, the biggest loser. but we're going to start with the lose in the last hour on the bank stress test. kayla has more details for us. >> there was good, bad and ugly when we saw the banks release what they were giving back to share holders. we'll start with the good. a lot of the banks did pass the fed test with no objections of what they plan to give back to shareholders. bank of america is increasing its dividend to a nickel. goldman sachs, interestingly, was one in question with the federal reserve. it had to resubmit its plan because the o

we'll be right back with charlie gasparino and dick bove. ack dow.only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay noaxes for 10 years. with new jobs, new opportunities and a new tax free plan. there's only one way for your business to go. up. find out if your business can qualify at start-upny.com [ cows mo] [ sizzling ] more rain... [ thund rumbles ] ♪ [ male announcer ] when the rld moves... futures move first. learfutures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ on thinkorsw from td ameritrade. adam: we still got charlie gas here with shares of freddie mac and fan fay. there could be a bipartisan agreement to lead to shutdown of two mortgage giants. and as promised charlie has dick bove. >> one great thing about the cnbc story herbalife five minutes early and mainly a stock you like, still like, two stocks,

dick bove, dick, great to have you with us. you heard some of the debate we had about bank of america. that's your top pick. and you're expecting the big increase. are you concerned about the run it's already had, perhaps it's reflective of the catalysts that are expressing themselves right now? >> no. i still think the stock is going to go to 30. but in answer to some of the questions that were raised, in tune of what's next? i think the first thing that should be understood is that the industry, now, is at all-time record earnings. secondly, the balance sheets of these companies couldn't be better. they have more capital or percentage of assets than they had going back to 1938. they have more liquidity on their balance sheet, which is at 40-year highs. if you look at things like their loan-to-deposit ratios, they're also at 40-year lows. which means if you would think of a bank balance sheet as a factory, this factory is running at around 65% to 70% of capacity, which means the ability to show significant increase in earnings

dick bove joins us now to weigh in.k. >> thank you. >> i wonder how much further you think as we approach the fifth year anniversary of the market bottom in 2009 we could go from there especially for the banks you do cover? >> in january 2011 we wrote a report saying that the new golden age in banking had begun, and basically we have not had any down quarters other than one in that whole period, which is now about three years. and bank earnings are at all-time records that the industry has never seen before. at the same time that we've seen this, you know, move to record earnings in banking companies, you know, we have not seen the same move in the stocks. in other words, the valuation of banks as it relates to book is about 20% to 30% premiums. if we're going to get what mr. bernanke said yesterday which is 3% growth in the economy, these stocks should go to 2 to 2.5 times book. in my view you still have 100% move ahead of you in bank stocks, and i think they should be bought. >> wow, a doubling from here. just so peop

dick bove, well-known financial analyst on wall street today said, if you get rid of fannie and freddie, if you downsize them, if you do away with them, you essentially get rid of 30-year fixed mortgages. does he have that right? >> no, he has that wrong. the fact is that our plan, and our proposal will protect the 30-year mortgage. that is the government backed reinsurance system that we are establishing. we are requiring that the private sector have a first loss position of 10% as you indicated but there is a government-backed reinsurance program, similar to the fdic for deposit insurance protection. and that will preserve the 30-year mortgage in the united states markets. gerri: what are going to be the new requirements for homebuyers and what do i say to critics who say there is not enough protection of programs that would help lower income folks get houses? >> we do have programs in place in our legislation that would help to protect for low-income and underserved markets. and as a result of that, i think that those critics are just not correct. there are some who would like to go

we ran this by dick bove. my producer asked point blank what do you make of this?ame up with an interesting quote. in ten years the financial capital of north america will be toronto, not new york city. and i tell you ten years goes by pretty fast. if you listen to the banks under this tax with everything else that is what they're saying. we will do what ever we can to get out of dodge. it is toronto. >> as you are reporting, and the other side of this argument is a lot of these foreign banks have been issuing large percentages of commercial loans in the united states and we pull out you will see a big damper on the economy. >> they are reducing footprints for a while. barkleys has been cutting back. interesting that barkley's is in the middle of this. this will lead them to further cut back. that is what they are telling lobbyists, and what we are hearing, this thing is a job killer. they are talking their game. just giving you what they are saying. i kind of believe them on this as someone who is skeptical of everything the bank says on top of everything else whe

that is what dick bove said. adam: a lot of taxpayers would say good. >> we could wait in and go back and forth but citigroup people believe this is clearly payback for that scandal they had in the mexican subsidiary, a huge scandal brewing, foreign bribery making loans to bad players in mexico, they are getting hit pretty hard in mexico. y investigation, an fbi investigation. they believe the stress test which is arbitrary is holding them accountable for that. this is how they get back at banks, use the stress test. adam: what about holding city accountable for the fact that you and i and 310 million americans shaved the proverbial but of those people billions of dollars? >> that is a different issue. all these banks too big blue station breaks,. very hard to manage. michael corbett, ceo of citigroup needs to be taken to task for the fact that he didn't see this coming. that is why he was brought in. adam: the scale. >> if there is an arbitrary nature to the stress tests. does anybody think citigroup will go out

. >> and the u.n., too, defending when we had dick bove on the show. and what about you, pete?> i like citi. >> yeah? >> i think one of the issues that citi really needs to face, karen, i think this is one of the big banks that might need to spin something off. when you look at the fact they have not integrated some of the buys over the years and they're such a massive bank, i don't like the mass of what they've got. but i don't think they have the risk controls, clearly with the mexican issues they've had and so forth, there are parts of this bank that can be spun off. >> like what? what would you see as the obvious spin-off? >> i think there's multiple places around the country in this global bank they really are citi. and the fact they have exposure in europe where they have not integrated into citi. they are separate entities they don't have all of the risk parameters to be able to run. and because of that, they run into issues like they did in february. and because of that, that's why i think they didn't pass the tests because they haven't been diligent enough to make sure

eliminating fannie and freddie, shares of the mortgage buyers in free-fall, charlie gasparino will talk to dick bovee white house move to reform the u.s. mortgage market. adam: many falling from the sky in the form of an asteroid. we will introduce you to the man behind a plan to mine asteroids for astronomical profit.

and we have a very respected dick bove. tests coming up. "fast money" starts right now. we're live from the nasdaq market site in new york's time square. i'm standing in for melissa lee for the next three days. you're stuck with me. >> awesome. >> sorry. well, we have our traders here tonight. tim seymour, steve grasso, karen finerman and guy adami. it was an ugly day on wall street, right? the major indices across the board, with the nasdaq, the biggest

there are plenty of guys like dick bove willing to say this will be the end of the 30-year mortgage in america. >> it's about time. if the u.s. government wants to take over industry after industry, if the fed wants to take over the marketplace, you know, everything from health care to interest rates to financing our houses, that's fine, but it was never the intent, it's a lazy factor. it was putting -- put in conservatorship in 2008 and years later they haven't dealt with it. they're going to combat mother nature for global warnings and they've left these groups in conservatorship. they can't finish their homework. canada is doing just fine without government-sponsored enterprises. if it has to be the end of the 30-year mortgage, so be it, but i'd like to be a privatization back of the mortgage arena. >> i thought you were getting revved up. i thought we were going to have another political party born here. joe, durwould you buy anything here? >> i think you have to be cautious. europe is an interesting example. i think what you're seeing is a lot of speculation, whether it's record l