Big Bank Stocks: Why Risky Bankers Get Fired (and Conservative Ones Don’t)

The thing to note is the vast difference between the losses suffered by the big four and those at U.S. Bancorp (NYSE:USB). What, besides size, explains this? It’s simple. U.S. Bancorp (NYSE:USB) never lost sight of Schwed’s words — which, mind you, are anything but revolutionary in the world of risk management.

And things haven’t changed. Here’s U.S. Bancorp (NYSE:USB)’s chief credit officer explaining the bank’s philosophy on risk at its investor day.

[W]e’ve used the word conservative a lot. I think that’s appropriate when we talk about the culture of the bank. And we’ve also used the word prudent. I like the word prudent because it means that you’re actually thinking about what you’re doing, you’re evaluating it. That’s what we do, we evaluate the risk. We’re risk managers, and then you take action on that. So that’s — prudent is a good word to describe our credit culture.

In sum, it’s easy to get swept up in the sophisticated games Wall Street plays. But it does so merely to enrich itself, and most certainly not for the benefit of investors. The good banks today are the same as the good banks 100 years ago. They manage risk, plain and simple. And, by doing so, they maximize return.

The article Why Risky Bankers Get Fired (and Conservative Ones Don’t) originally appeared on Fool.com and is written by John Maxfield.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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