[Originally published on May 2, 2014.]
The banking sector never seems to stray too far from the headlines of the financial press. And there is good reason for that. Financial companies occupy a unique nook in advanced economies as they serve as the transmission mechanism to allocate capital…in the form of excess savings…to its most effective use, which are investments offering the most attractive risk/return profile. Therefore an undeniable link exists between a healthy financial sector and overall economic well-being. In addition to this broader function, investors shower the sector with attention given that, even after the financial crisis, it remains the second largest bucket of the S&P 500.
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Investments are not like the entertainment industry, where any publicity is good publicity. Sector stalwarts continue to get raked over the coals for missteps in the run up to the financial crisis. Recent headlines involving one key player's