Yahoo TV

Following Moody's downgrade of ten mid-sized U.S. banks earlier in August, S&P analysts have downgraded five regional banks this week. Odeon Capital Group Financial Strategist Dick Bove joins Yahoo Finance Live to discuss the systemic risks plaguing U.S. banks and regulators' response to the banking crisis in early 2023.

"S&P kind of lost the ball here, they should've done this a few months ago," Bove says on the recent downgrades. "The banking industry crisis began last March, and it has not been alleviated or eased up in any way, shape, or form since then. And if people didn't believe it, by the time they saw the second quarter earnings of banks, they should've understood very clearly that this industry is undercapitalized at the current time, and that is the source of its problem."

Highlighting tightening lending conditions for borrowers and the elevated interest rate environment, Bove shares his top bank stock trades, seeing opportunities in Citigroup (C) and Fifth Third Bancorp (FITB).

"I like Fifth Third because I think the management there has a very clear view of what is going on in the economy," Bove states. "They have... structured their balance sheet to take most of the impact from the increase in interest rates, and it's already been worked into the balance sheet."

This post was written by Luke Carberry Mogan.