Sleeping giants: Will US banks soon unleash true earnings power?

A string of fines and legal costs has obscured banks' true earning power in recent years. Moreover, banks are now run by prudent risk managers, argues Tony Coniaris from Harris Associates.

Anyone reading the financial press over the last six years or so, will have likely noticed a steady drumbeat of negative articles on banks and, in particular, large banks in the US. Although the negative newsflow has not stopped, a thoughtful look reveals that the debate has changed from one of survival, to guesswork as to what the next fine will be, or how much excess capital will be returned to shareholders in the next stress test. Impossible to analyse? Furthermore, after 2008 many investors decided they did not want to invest in banks - ever. They concluded that banks were unan...