President's Blog

Shareholder Driven Capitalism

May 17, 2012
post contributed by Megan Flynn

Tim Selby introduced our February speaker by sharing with members a review of his book “Exile on Wall Street”. Quoting the review he said, “This is a guy who really, really wants to do the right thing” He was one of eight who saw the crisis coming and was the only analyst to testify during the Senate Banking Committee hearings in 2002 on conflicts of interest on Wall Street.

Mike Mayo began by giving members some information on his background before going into some history of the Federal Reserve. He shared a memorable analyst call with JP Morgan’s Jamie Dimon and the message Mayo explained receiving from this particular meeting was, “if you’re wrong going against a big bank like this you’re going to get called out”.

Mayo described his thoughts and experiences right before switching Citi from buy to sell which he said is “like slamming on the breaks while going 60mph”. “A few times in my career I just thought, I don’t care”, Mayo said explaining he didn’t care that he may not be able to work again as he was putting his career on the line by making these calls. “You never know what is going to happen when you release some information”, Mayo said.

Throughout the evening, he kept his focus on particular people that “taint the entire industry”, individuals that should be held responsible he said, there needs to be a micro, not a macro fix. You have poor performance and your company’s stock is down, there have been people who have then been promoted, “That’s not capitalism, that’s entitlement,” Mayo said.

You have to look at the big picture and on a more simple level, Mayo said, If it grows like a weed, it is a weed. Mayo ended by posing a question to members, “Why are we dealing with the same management teams? Do we trust them more now?”

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