Issuing a sell opinion on a bank stock is usually a short route to oblivion for a banking analyst.  Mike Mayo is one banking analyst who did issue sell opinions on banks yet managed to survive.  In his new book, “Exile on Wall Street”, banking analyst Mike Mayo provides an insider’s view on why the financial system has spiraled out of control, leading to a series [...]

The Financial Stability Board (FSB) was established to coordinate international efforts to promote effective regulation and supervision of the global financial system. In its latest report on global systemically important banks, the FSB makes it clear that the world’s largest banks have become too big to fail without crashing the global economy. The leaders of the G20 recently [...]

The “Too Big To Fail Banks” are at it again, making huge speculative bets on the odds of sovereign default by Portugal, Italy, Ireland, Greece and Spain.  The costly lessons of the derivatives debacle of 2008 have apparently been forgotten. In 2008, the Too Big To Fail banks bought massive amounts of credit default swaps (CDS) to protect themselves from loss on their [...]

The Federal Reserve recently allowed Bank of America to move its massive derivative positions from the bank holding company to its banking subsidiary which is an FDIC insured depository institution.  By allowing this transfer, the Federal Reserve has allowed Bank of America to shift the risk of loss on speculative derivative contracts from the non-bank affiliate.  A failure of [...]

Potential losses on Bank of America’s massive $75 trillion book of risky derivative contracts has just been dumped onto the FDIC by the Federal Reserve. Derivatives, once described by Warren Buffet as “financial weapons of mass destruction” are complex contracts entered into for speculation or to hedge risks linked to a wide variety of other (derivative) financial [...]

The European banking crisis continues to spiral out of control while hapless politicians fail to put together a credible resolution plan. Part of the problem may be that it is difficult to construct a solution when failing banks are bigger than the countries that are trying to rescue them. The latest European bank on the verge of collapse is giant Dexia, a Belgian-French bank.  [...]

Three years after the height of the financial crisis, the issue of impaired assets on bank balance sheets remains a major risk to the health of the banking system. Regulators have allowed banks to avoid taking losses on impaired assets by not requiring mark to market accounting.  The extent of overvaluation on bank loans can be seen every time a bank fails and the FDIC has to routinely [...]

The European banking crisis intensified as the threat of debt default contagion spread across Europe.  What was once a “Greek” problem has quickly overwhelmed all of Europe, resulting in a broad sell of equities and frozen credit markets.  Bloomberg reports that European banks are now being valued at levels last seen during the worst of the 2008 financial crisis. A [...]

After rallying last fall, many of the big bank stocks have seen substantial declines from the beginning of the year. Growing fears about the health of the banking industry are discussed in the latest Economics and Mortgage Market Analysis issued by Fannie Mae.  Fannie Mae cites a very weak housing market and an economic slowdown as the primary factors for worries by regulators [...]

Speaking at Bank of America’s first investor conference since 2007, Chief Executive Brian Moynihan told shareholders that he was focused on increasing shareholder returns through share buybacks, special cash dividends and increased regular dividends. Mr. Moynihan also cheered investors on by predicting that Bank of America could earn, under normal business conditions, up to [...]