Mayo Says Investors Must Be Vigilant If Bank Regulations Eased

(Bloomberg) -- Mike Mayo, the banking analyst formerly with CLSA Ltd., said investors will have to be more diligent in assessing the strength of the industry if the Trump administration follows through on promises to ease regulatory burdens.

“We collectively, especially investors, need to hold corporations and their managements and boards of directors more accountable” now that the push is on to roll back government rules meant to protect consumers and shareholders, Mayo said Thursday in an interview on Bloomberg Radio. “What I've been proud of is holding truth to power -- holding managements accountable.”

CLSA, the brokerage owned by China's Citic Securities Co., shut its U.S. equity-research operations Monday, dismissing 90 employees including Mayo, 53. Mayo, who wrote “Exile on Wall Street: One Analyst's Fight to Save the Big Banks From Themselves,” introduced himself as a “free agent” Tuesday at JPMorgan Chase & Co.'s annual Investor Day. He gave no indication Thursday where he might be headed next, though he noted that he's been fired about three times in his career and resigned five times.

“There's always room for those who are good at their job,” Mayo said.

President Donald Trump has called for a moratorium on new rules so existing measures can be reviewed, and he's signed directives aimed at starting the process of rolling back restrictions put in place to prevent another financial crisis. Among his targets are rules that guard against predatory lenders and force brokers to lower fees for retirees, as well as the Dodd-Frank Act, the sweeping overhaul of U.S. financial regulation put in place after the financial crisis.

“My message to Washington, D.C., is: Don't sacrifice one iota of the strength of the banking industry,” Mayo said. “But once you've done that, eliminate all the red tape, the complications. I mean, you have seven different regulators overseeing mortgage finance. That's just too many.”

To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net.

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net, Steve Dickson, Steven Crabill