Six Thoughts: Big Bank Investing

Six thoughts on the lay of the land for those of you considering investments in Wells Fargo, Citigroup, JP Morgan, U.S. Bancorp, Goldman Sachs, Morgan Stanley, or Bank of America:

#1. Recent History Of Regulatory Environment, Wave 1: The Wall Street Journal has provided readers with excellent journalism recently regarding the changes for America’s megabanks, starting with the general piece “What is a bank?” and continuing through yesterday’s column “Stressing Over The Bigger Costs of Being a Big Bank.”

Every now and then, government actors scratch the itch to do something that sounds like it has a salutary objective in mind but ends up imposing very costly agency costs that takes away much of the intended wealth maximization. In the 1985 Smith v. Van Gorkom Delaware case, the court held that business executives need to “reasonably inform themselves of all material facts” before making a “substantial” … Read the rest of this article!