views analyst warns the stage is set for a repeat of the financial system’s collapse

A LEADING US bank analyst warned that the SEC’s fraud lawsuit against Goldman Sachs is paving the way for another financial crisis, just days after calling for executive heads to roll at the bank.

Rochdale Securities analyst Dick Bove caused consternation at the weekend by suggesting Goldman chief executive Lloyd Blankfein and finance director David Viniar should “fall on their swords” to protect the firm’s reputation in the wake of the SEC lawsuit and other public relations gaffes over the past few years.

Bove yesterday went a step further by claiming the case is “setting the stage for collapse [of the financial system] one more time”, in a section of a report entitled “Death Wish”.

He told City A.M. yesterday the SEC’s case against Goldman has “no merit whatsoever” and defended Goldman’s decision not to reveal Paulson’s participation in the ‘Abacus’ CDO transaction. “No brokerage operating anywhere in the world discloses the names of a buyer and seller in a transaction,” he said.

Bove joined Rochdale last year from Punk Ziegal, now part of investment bank Ladenburg Thalmann. He is no stranger to controversy, having previously been sued for defamation by BankAtlantic Bancorp in 2008 over a report on possible bank failures entitled “Who is Next?”.