Toxic reputations are a time bomb for banks

by. Ryan Clancy

More than five years after the 2008 economic crisis, banks still have an awful reputation.

And the hits keeps coming with this this week’s announcement from Credit Suisse that it’s pleading guilty to helping Americans evade taxes. In fact, Attorney General Eric Holder recently said that no bank is “too big to jail,” as his Justice Department pursues criminal charges against a number of financial institutions.

Does it really matter? You could be forgiven for thinking it doesn’t.

After all, a historically bad reputation hasn’t stopped banks from delivering historically good returns. Bank profits reached an all-time high in 2013 and large U.S. bank stocks have outperformed the S&P 500 for two years running for the first time since 2003.

If a half-decade of public outrage and Occupy Wall Street isn’t enough of a reputational blow to knock banks off their stride, it’s fair to wonder what is.

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