Mike Mayo Says U.S. Banks Are "Underperforming"

How is your bank performing?

American banks are underperforming. In other news, you’re reading a blog about payday loans and financial matters.

Felix Salmon reports for Reuters that veteran banking analyst Mike Mayo of Calyon Securities and CLSA Asia-Pacific Markets brokerage and investment group has given American banks the thumbs down by slapping them with an “underperform” rating. What this means is that the U.S. banking sector still has a ways to go before righting their ship. It also means that government aid may not help as much as was expected.

The seven deadly sins of banking

Unwise risk-taking has run rampant throughout the country’s banking establishment, largely because banks have consistently violated what Mayo calls “the seven deadly sins of banking.”

“The seven deadly sins of banking include greedy loan growth, gluttony of real estate, lust for high yields, sloth-like risk management, pride of low capital, envy of exotic fees, and anger of regulators,” he said.

Mayo was right to point out that the effect of all of this is instant gratification - front-load earnings - but the later cost to the economy is too high to warrant such present action. Since most analysts have been unable to sight an end to the storm yet, the sins of banks will continue to wreak havoc. ... click here to read the rest of the article titled "Mike Mayo Says U.S. Banks Are "Underperforming""