A Mayo with Kick

Longtime analyst Michael Mayo was perhaps the most colorful witness during an otherwise dry day of testimony Wednesday before the Financial Crisis Inquiry Commission.

Mayo, a managing director and financial services analyst with Calyon Securities (USA) Inc. who spent two decades at the Federal Reserve, pulled no punches. He said the banking industry was "on the equivalent of steroids" before the crisis and that "benefits were front-loaded and costs were back-ended."

He said he's "shocked and amazed that more changes to banks have not taken place. … Wall Street has done an incredible job of pulling the wool over the eyes of government and others."

Mayo described 10 principal causes of the crisis: excessive loan growth; higher-yielding assets; concentration of assets; higher balance sheet leverage; more exotic products; false prosperity based on consumer debt; insufficient loan reserves; lack of proper regulatory action; heavy government emphasis on homeownership; and incentives that encouraged risky behavior.

"No one understood the risk" of real estate loans, he said. "I compare it to bad sangria. A lot of cheap ingredients packaged together might taste good for a while, but eventually it leaves you with a headache."

The solution is as easy as "ABC," Mayo said: accounting, bankruptcy and capital. Accounting for reserves should better reflect potential losses, more firms should be allowed to fail and capital requirements should be tougher.

BB&T Texas Hire

BB&T Corp. hired an outside executive with Texas roots to run its toehold banking operations in the state.

BB&T, of Winston-Salem, N.C., said Tuesday that Kay St.John had joined the company as a regional president to oversee the 19 branches it gained after buying the failed Colonial Bank in August. St.John, 56, previously led a Wells Fargo & Co. banking team responsible for relationships in Arkansas, Louisiana, Mississippi, Oklahoma and Texas.

Before joining Wells in 2006, St.John spent nearly 30 years at Hibernia National Bank, which was sold to Capital One Financial Corp. in 2005. During her year at Capital One she was part of a team that doubled the company's branch count in north Texas, to more than 40.

Aid to Haiti

Banking companies lined up Thursday to support relief efforts for earthquake-ravaged Haiti and pledged to match contributions from employees.

JPMorgan Chase & Co., Morgan Stanley, Bank of America Corp. and Goldman Sachs Group Inc. were among the financial companies offering cash to various charities. Each donated $1 million for charities, including the American Red Cross and Doctors Without Borders.

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