by Pam Martens and Russ Martens
Wall Street on Parade
Wells Fargo bank analyst Mike Mayo appeared on CNBC this morning to paint a rosy picture for how banks would be treating the Fed’s less than dovish statement yesterday. Mayo said this about the banks:
“Back in the 70s or even 1994 the inflation caused unrealized securities losses, derivatives losses, asset/liabilities mismatches. So too much inflation is hell for banks. But we think what’s happening now is a dose of heaven. And so higher rates sooner can allow banks to finally earn more money on all those deposits that they’ve gathered. And so this means that assets reprice faster than their liabilities.”
What actually priced much faster than either assets or liabilities were the share prices of the mega banks on Wall Street. The cheery words had barely left Mayo’s tongue before the biggest banks on Wall Street went into a sharp swoon. His employer, Wells Fargo, fared worst of all. By 12:39 p.m. this is where things stood: Wells Fargo (WFC) was down 4.79 percent; Citigroup (C) was off by 4.22 percent; Bank of America (BAC) had lost 4.11 percent; Morgan Stanley (MS) had given up 3.93 percent; Goldman Sachs (GS) shaved 3.33 percent while JPMorgan Chase gave up 2.92 percent.