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March 20 (Reuters) - The U.S. financial crisis is over but problems facing the economy are not, said Richard Bove, financial analyst with broker Punk Ziegel, adding that this was a "once in a generation" opportunity to buy bank stocks.
"I do, in fact, believe that the crisis is over. There will be more negative developments but they will be meaningless," Bove wrote in a note to clients.
"This comment sounds ridiculous given the conviction on the part of most commentators that the worst is yet to come; the extent of the decline is unknown; and that the length of the decline is similarly unclear," Bove wrote.
The decline in capital markets has created an opportunity for banks to take market share from the brokers, he said.
"An environment has been created that will pump profits into the American banking system," Bove said.
"Investors are so focused on the potential for loan losses and the flawed valuations created by an obscenely invalid accounting rule supported by a soporific SEC (Securities and Exchange Commission) that they are missing this fact."
Bove said in the current crisis, the key event was the insolvency of Bear Stearns Cos Inc BSC.N.
"This event sent so much fear through the markets that action was taken to solve the crisis," Bove wrote.
"The actions taken by the Federal Reserve were innovative, dramatic, and, in my view, brilliant because they went right to the problem," he said.
On Tuesday, the Fed cut interest rates by three-quarters of a percentage point, the sixth time in six months it has slashed the Fed funds rate target for overnight bank loans, to 2.25 percent.
The Fed also dusted off a Depression-era rule to let securities firms borrow directly from the Fed through its "discount window."
This decision was announced along with the Fed's promise to underwrite J.P. Morgan Chase & Co's (JPM.N) takeover of Bear Stearns for the rock-bottom price of $2 a share. (Reporting by Tenzin Pema in Bangalore; Editing by Himani Sarkar)