Banks Have Bigger Worries Than Occupy Wall Street

The Wall Street protesters and their barely discernible message that seems to want to hold bankers accountable for the 2008 financial collapse is attracting lots of press attention, but inside the big firms, senior executives have barely noticed.

The reason: They have a lot bigger problems to worry about.

Executives at most of the big banks have benefited from the fact that the protesters must not know how the read a map because the demonstrations are taking place in Wall Street financial district that hasn't been the home of the biggest firms and banks for years.

Most of the major firms have moved to midtown, or in the case of the evil empire, Goldman Sachs to the far west side of the financial district, thus nowhere near the protesting epicenter of Zuccotti Park. Even the New York Stock Exchange, just blocks away from where these "revolutionaries" are gathered, is no longer the place to protest greedy traders because there just aren't that many traders there anymore.

In fact, you can find more television reporters at the NYSE than traders these days -- which may be why there has been so much coverage of this "movement," which based on the absurd statements coming from some of its participants has no real meaning other than to give a bunch of slackers something to do with their lives.

OK, so while the big firms and their employees have been largely spared the indignity of being screamed at by people who haven't shaved, showered or brushed their teeth in days, they haven't been spared the wrath of the markets, which are making a definitive statement of Wall Street's future -- and it ain't good.

As someone who covered the 2007-2008 financial crisis, I can tell you the stocks of the big banks are trading like they did during the banking collapse. Does that mean that any one of the remaining five big banks -- Citigroup, Bank of America, Goldman Sachs, Morgan Stanley and JP Morgan -- is about to implode a la Lehman Brothers, sparking a broader collapse and a re-do of the government bailouts?

I don't think so -- and neither do some of the smartest people I know who study these things. To be sure, the big banks and firms face daunting issues: Massive regulatory costs, and the ripple effect of the European banking crisis chief among them. But even the weakest of these firms like Bank of America and Morgan Stanley have more capital and less risky assets on their books than they did during the crisis years.

That doesn't mean these firms -- BofA and Morgan in particular -- are instilling confidence in investors. They're not. In fact, the CEOs of both firms have been making the round in recent weeks assuring analysts and investors that they're firms are basically fine despite the rash selling in their shares in recent weeks and shares keep hitting new lows. (BofA is close to $5 a share, which among investors is penny stock territory)

As I have reported on the Fox Business Network, James Gorman, the CEO of Morgan Stanley, has been notably active even though the firm is supposed to be in a "quiet period" as it prepares to release third quarter earnings in about 2 weeks. But Gorman has been anything but quiet. He's confronted analysts and investors directly, emphasizing that fears about the bank's exposure are overblown -- or non existent.

He issued a statement to employees last night to ignore the noise. For his efforts, Morgan has received a string of positive commentary from analysts and an unusual positive statement yesterday from Mitsubishi bank which gave Morgan capital during the banking crisis and remains its largest investor.

But it isn't working -- in fact, just the opposite is happening, most investors are losing faith in the company.

Do they think its going out of business in a 2008 sort of way? Again, I don't think so.

But they are coming to the conclusion that protesting too much must mean that there's something amiss at Morgan Stanley.

That something isn't the toxic waste of 2008 but a different toxicity that Gorman is only underscoring when he tells the world that Morgan has been unfairly singled out: A business model that isn't working and might not work even when the Euro crisis is over.

In other words, Gorman isn't making the sale about Morgan's future. Yes, other banks are getting hammered amid the recent round of panic selling, but Morgan stands out because its CEO is the most active in trying to reverse the tide.

And as he's making the rounds, here's what I hear from investors: Morgan may have enough capital to survive (though they're not totally sold on that either), but not a lot going for itself to thrive when business conditions improve.

Gorman's pitch since he became CEO a couple of years ago is that there's lots of money to be made offering advice to small investors through brokers and corporations through investment bankers.

But investors are telling me that either that they're not sold in the business model, or not they're not sold that Gorman's the right guy to carry it out.

They're also saying something else: The CEO doth protest too much. Sometimes when the markets get hairy, less is more, or as in the case of James Gorman and Morgan Stanley, you start sounding like you have something to hide.