BREAKING: Banking is not such a great business in the presence of regulation and with a dearth of opportunities to add the secret sauce (leverage). I have friends who sit on trading desks at big banks who have regulators on their laps.
Anyway, a snippet of Meredith Whitney’s latest commentary on the state of the TBTF Industry (emphasis mine):
Whitney on how many more jobs will be lost:
“I think the industry goes for another 50,000. We’re already close to 200 deep…Across the board. London is as miserable as New York.”
On whether we’ve seen the end of the overhiring and overfiring spree on Wall Street:
“Everything goes in extremes and particularly in financial services. I hope I am around when the over hiring phase comes back to this market. But I would argue the banks have not over fired and are really middle of the way through firing. As I said, shareholders are demanding increased profitability. These banks are not earning their cost of capital and it’s being reflected in their stock prices.”
On the state of big banks:
“It’s bad. If you look at the European banks reporting earnings today, it’s a reflection of the same that the old way of making money for Wall Street for so many of the banks that became real Wall Street driven revenue machines is gone. That was driven by the unsexy world of housing and leverage. The world as deleveraging—at least the post-modern world is deleveraging. It puts real sustained pressure on revenues and the business models just have to shrink.”