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CLSA Bank Analyst Mike Mayo argues the issue is not that large banks are “too big to fail” but that they have become “too big to manage” and s...
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Joining us now the nation's top banking analyst Mike Mayo -- say also the author of the book X file on Wall Street good to have you with us thanks for having.
Let let's start with that I mean this is a huge bank we're talking about two and a half trillion dollars in in that sense it's.
This is two billion dollars you can this CEO looked like.
Was furious and contrite at the same time.
Our -- uninteresting and make sure that the sectors sold off today the market rattled Europe parts.
One month ago the CEO of JPMorgan Jamie Dimon said all was fine with their investments.
And now months later we find out.
It wasn't -- so either he didn't do his homework.
Or he did its homework and got the wrong answer either serious not a good one.
Not a good one and in fact you had already downgraded.
The bank -- -- not.
What a week ago I did given the deceleration.
In economic growth and their political uncertainty in Europe which had a chance to come back.
And hurt the US banks and to some degree that's what happened Europe sneezes and the large banks catch -- And this being the case act.
Four years almost four years after the economic crisis of 2008.
This being the case after Jamie Dimon could probably state that he did not require a bail -- it is institution.
Now suddenly the smartest guy in banking in -- country.
-- it is using the word stupid.
That's going to be describing for all of the investors in all of those banks as well as their depositors.
Not the depositors your deposits are safe in the bank but who would have thought.
That the big mishap would have been JPMorgan -- -- -- it happened at JPMorgan it can certainly happen that other banks and you mentioned too big to fail.
Where you put me on -- we're really talking about too big to manage at least for the lesser banks I think.
Give other banks like Citigroup and BankAmerica at least in those cases those banks should be broken down into more manageable sizes not by the regulators.
But by the shareholders the say the issue with the financial crisis is not capitalism.
It's that we haven't had enough capitalism capitalism involves the owners taking more responsibility and action when they see wrong action.
And the reality is this bank in particular two and a half trillion dollars brilliant management tremendously successful management.
Glass-Steagall.
I I can't tell you you know how many people like you're saying.
We should never ever have -- Glass-Steagall.
To be overturned.
Because it really did maintain.
AA division.
That'd work for some.
Sixty years that.
-- and eliminating Glass-Steagall did -- creator raised the bottom Bear Stearns still would've failed.
Mean and still what if they -- you still would have had a lot of problems but once you had the creation of that today's Citigroup.
-- create a bank with two trillion dollars of assets in.
Two trillion I don't think people understand how big that is that's one million tons one million times still.
Our biggest banks are twenty times larger than they were just two decades ago right and once you -- one big bank.
-- a lot of the other players took on more leverage took more risk trying to keep up.
Going forward or we are you are -- to see stability or greater instability in the marketplace as a result.
JPMorgan's trading loss doesn't mean tomorrow or next week we're going to have another one over the next five years.
We still not fixed the root causes that created the financial crisis and that's faulty incentives -- incentives at the trading level.
If this trader made a lot of money for the firm he would have made a lot of money perhaps if he lost money all right -- move one -- the next -- including at the executive -- Managers make a lot of money when things go well they don't necessarily lose in a big way.
But then -- also at fault in says the body overseers for the rating agencies accounting -- regulator it's a whole host of.
Parties have been in a crisis kitchen and still remain.
Well -- we appreciate your being with us front panel and -- want to commend you.
Or to his book again.
RX -- on Wall Street an entire chapter.
Devoted to Jamie at the -- thanks for being here come back soon -- under hopefully better circumstances.
The marketplace thank you very.
