May It Please the Palate: Big banks and good pizza

By Nick Roumel

Dear Mr. Berko:

What are your thoughts on buying stock in some of the big “money center banks?”

I wanted to buy 1,000 shares of Bank of America when it was selling for $5 a share back in 2011.

Unfortunately, I got scared and didn’t have enough confidence in my decision to pull the trigger, though I opened an account there.

I didn’t know that Papa Murphy’s is a public company until I read your recent column about the company, and then I bought 200 shares.

That place does have great pizza. Do you still like the stock? It hasn’t done much since I bought it.

JD, Fort Walton Beach, Fla.

Dear JD:

I wouldn’t recommend Bank of America (BAC-$15.23), though it earned a sweet $4.5 billion in 2014.

Nor would I recommend Citigroup, HSBC Holdings, J.P. Morgan, UBS, Wells Fargo or most other Wall Street banks, which cumulatively made over $100 billion in 2014.

I don’t like these banks, because their dishonesty makes the remaining 6 percent of the banking industry look bad.

These banks admit to rigging the global currency markets; manipulating the Libor; scheming to control the copper, zinc, aluminum and nickel markets;
contriving to push oil prices over $100 a barrel; using high-speed computer trading to manipulate stock prices; trading with depositors’ money; and destroying the home mortgage market while forcing Fannie Mae and Freddie Mac into bankruptcy.

And as if that weren’t enough, these banks tyrannized depositors with spurious charges on their personal loans, their home equity loans, credit card charges and checking account chicanery.

Some observers estimate that the 10 largest Wall Street banks cost depositors over $3.5 trillion between 2002 and 2009 and very nearly destroyed the economy.

Fortunately, Mary Jo White, chairwoman of the Securities and Exchange Commission, pleaded, begged and beseeched these banks to behave like good citizens.

BAC has 5,000 locations in 29 states, 230,000 employees, 10.5 billion shares outstanding, $2.1 trillion in assets, long-term debt of $250 billion, a market capitalization of $181 billion, a book value of $23 a share and a stinky return on assets of 0.3 percent, and it may earn $1.50 a share this year.

However, if the SEC continues to discourage BAC from engaging in its usual innumerous unsavory activities, I doubt BAC and other big banks can meaningfully grow their revenues and earnings.

Big is not good; big is bad! Banks of that size and complexity are like the Pentagon, a bureaucracy that’s inherently unmanageable because the feet just don’t know what the head is doing until it’s too late.

And BAC’s cost-cutting programs, such as management’s new blueprint to save $8 billion this year, look good on paper, but in reality, they will fall splat on their butts.

Frankly, I can’t imagine why someone would open an account with a huge, coldhearted, stuffy bank home-ported in Charlotte, North Carolina, 450 miles away!

It doesn’t make sense when there are several great hometown, home-run banks in Fort Walton Beach that won’t steal your home or bust your chops over a bounced check and will treat you like a good next-door neighbor.

Some analysts believe that BAC will underperform the market over the coming three years.

They believe that loan volume will remain anemic, that interest rates will remain low, that retail sales will fail to ignite, that new car sales for 2015 will wane, that wages will remain low, that housing activity will be weak and that investment banking activities will be unimpressive.

Therefore, the potential growth of BAC may disappoint investors.

However, their opinion is at odds with Deutsche Bank, UBS, Oppenheimer, FBR, Market Edge and Reuters, each of which has a “buy” rating on BAC.

I really like Papa Murphy’s (FRSH-$12.00) pizza and liked the stock until a member of its management team got all bent out of shape when I commented that franchisees in the United Arab Emirates use camel’s milk to make their pizza cheese.

If too many of the 190 employees at FRSH’s Vancouver, Washington, headquarters lacked a sense of humor, I’d short the stock.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at
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