He's Back Mike Mayo's New Book Blasts Wall Street

Daily Herald (Arlington Heights, IL), November 2, 2011 | Go to article overview

He's Back Mike Mayo's New Book Blasts Wall Street


Byline: Pallavi Gogoi Associated Press

NEW YORK Mike Mayo is at it again.

Mayo is the Wall Street analyst who has been a thorn in the side of banks for years. Outspoken, blunt, volatile and prickly, the 48-year old has been ridiculed by his peers, shut out of industry conferences, and slighted by CEOs. In 2000 Mayo was fired from Credit Suisse months after he wrote a negative report that exhorted investors to sell all bank stocks.

Today, Mayo is a bank analyst at Credit Agricole Securities who sympathizes with the Occupy Wall Street movement. He says he's as outraged as the protesters over the excessive pay Wall Street banks lavish on executives, even when they perform poorly. "That's not capitalism, that's entitlement," says Mayo.

He's poured his outrage into a book that chronicles his two decades in the financial industry: "Exile on Wall Street: One Analyst's Fight to Save the Big Banks From Themselves," published by John Wiley & Sons, which was released Tuesday.

It would be easy to dismiss Mayo as a disgruntled outcast if not for the fact that he is one of Wall Street's most respected bank analysts. He still carries around the two dozen rejection letters he received over 25 years ago from elite Wall Street banks like Goldman Sachs. He believes his lack of an Ivy League pedigree may have held him back from entering the inner echelons of Wall Street.

Investors who took Mayo's advice fared well over the years. He wrote a 1,000-page report in May 1999 in which he told investors to sell the stocks of 47 banks, even though most of his peers were urging investors to buy. One rival analyst mocked the report as

"Mayonnaise." Some traders who lost money started using Mayo's photo as a dartboard. A month after his report came out, bank stocks started to fall. One of his negative calls was Bank One, which lost a quarter of its value in three months. Its CEO left four months later. His prescience led one magazine to call him the Oracle of Delphi.

Though he was right many times, Mayo was criticized for missing one big call. He told investors to buy Lehman Brothers in 2007 and didn't change his recommendation until the stock lost 70 percent of its value. Soon thereafter Lehman filed for bankruptcy. That led to a freeze in global lending and brought on the worst phase of the 2008 financial crisis.

Mayo visited with The Associated Press in New York recently to talk about his book. In the conversation he lashed out at Citigroup Inc., SunTrust Banks Inc. and KeyCorp for their compensation practices. Below are edited excerpts.

Q: Why did you write the book?

A: I've worked at 6 Wall Street firms. I analyzed Wall Street. I was fired from one and muzzled by another. I've written about the problems at banks. I've testified in Congress about the problems and conflicts on Wall Street, twice. My perspective is unique.

At a time when there's so much anger about the problems on Wall Street, this book is very relevant.

Q: So does that put you on the side of the Occupy Wall Street protesters?

A: I'm as outraged as them. I've been on the inside protesting for 20 years.

When I started out on Wall Street I did exactly the way I was taught in business school and my analyst accreditation. But when my analysis was negative, like when I said KeyCorp was not a good investment, the firm cut back on business with my bank. I was penalized. …

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