Expand your mind and consider the following, brought to you by John Carney:
Seven of the 10 largest banks reported lower yearly profits in 2014, according to Federal Deposit Insurance Corp. data. Looked at another way, though, in terms of the risk posed by banks, there may be a benefit that has yet to fully materialize: As investors recognize big banks have grown safer, their theoretical cost of capital should shrink and earnings multiples could expand….
So while BofAs long-term earnings power may be diminished, it is taking on less risk for each dollar earned. In the end, shares of BofA and other big banks could get a boost if investors recognize this.
Finding Silver in BofA’s Regulatory Cloud [Carney/WSJ]