Salient to Investors:

Warren Buffett said banks have rebuilt capital and no longer poses a threat to the economy – capital ratios are huge and excesses on the asset side are largely gone . Berkshire invests in at least 4 of the 7 biggest U.S. lenders by assets, including Wells Fargo, Bank of America, Goldman Sachs, and US Bancorp.

Buffett said that bank concentration is not a worry, citing the Canadian banks, because our banking system is not unduly concentrated relative to the rest of the world.

Buffet said 9 years from now, Bank of America, Wells Fargo and other major banks will be worth considerably more.

Michael Mayo at CLSA said banks have done little to address 20 years of incentives that encourage excessive risk-taking even as balance sheets have improved, while compensation still favors short-term profit over long-term results that benefit shareholders. Mayo says bank CEOs will make a lot of money and be gone when the problems hit in the future.

Neil Barofsky said there’s so much opacity with these institutions that it’s almost impossible to tell where the risks are.

Citigroup, Bank of America, Goldman Sachs and JPMorgan all trade at less than book.

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