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Mike Mayo’s exile on Wall Street

December 29, 2011, 3:00 PM UTC
Fortune

Our Weekly Read column features Fortune staffers’ and contributors’ takes on recently published books about the business world and beyond. We’ve invited the entire Fortune family — from our writers and editors to our photo editors and designers — to weigh in on books of their choosing based on their individual tastes or curiosities. This week, writer Katie Benner takes a look at Exile on Wall Street, outsider analyst Michael Mayo’s insider look at high finance.



FORTUNE — Michael Mayo, the analyst who has never seemed afraid to criticize and cajole the world’s most powerful banks, wants you to know that he’s a rebel. It’s the persona that he’s cultivated in the press and with investors; and it’s also at the heart of his new book, Exile on Wall Street, the title itself is a riff on the Rolling Stones’ 18-track paean to sex, drugs, and rock ‘n roll.

Mayo, 48, convincingly shows himself to be pretty punk rock among sell side analysts. He called the bottom in bank stocks in 1994, and he was derided for it until the markets proved him right. He said to sell those very same stocks in 1999, a move that he asserts got him fired from Credit Suisse First Boston. (Fortune came to the same conclusion in a 2001 story about Mayo called “The Price of Being Right.”) And long before the mortgage crisis revealed executives at the nation’s largest banks to be some combination of cynical, morally bankrupt, or naïve, Mayo was calling out Wall Street executives for cronyism, lavish pay, and mismanagement. As one might imagine, his work has not made him wildly popular with his employers, who have mostly been bank CEOs. In a short time he burned several jobs and now works as a banking analyst at the small firm CLSA, an affiliate of France’s Credit Agricole Securities.

Mayo explains that he comes from a family of non-conformists. His mom, who was raised in an Orthodox Jewish home, embraced yoga, divorced, and remarried all before Mayo was five. And his beloved stepfather was an outsider and a fighter who escaped Communist Romania, fought for Israel in 1948, and slept with a handgun by his bed for his whole life. Mayo wasn’t armed with an Ivy League education or family connections as were so many of his contemporaries who were also seeking jobs in finance. And even after he had worked at firms including UBS, Lehman Brothers, and Credit Suisse, he never really fit in with the culture of Wall Street. At a party thrown at the summer house of a Lehman client in 1994, Mayo writes that he and his wife were fish out water in a sea of navy blue sport coats. “Jackie and I were used to the parties at Dewey Beach, where you showed up to parties in a bathing suit, and if you wanted to be a little dressy, you put a neon T-shirt over it,” he recalls.



Mayo’s sense of always being different from everyone around him gives him freedom to act and think outside of the conventions of his industry. This sentiment is at the heart of his book, which is a close up look at what it means, for better or for worse, to not go with the flow when you work in finance. Mayo is the rare analyst who doesn’t hobnob with the executives he’s supposed to cover. (It’s not unusual for star analysts to attend lavish parties and private dinners thrown by CEOs). And he scoffs at the pomp and perks that come with a job in banking.

Exile on Wall Street plays up the idea that Mayo is always an outsider peering into the alien world of bankers. Sometimes this can get a little tedious, but it never seems false, in part because Mayo is such a weirdo that it’s hard to imagine a world where he would fit right in. For example, he times himself to see whether it’s faster to take the local subway stop near his apartment, or to backtrack to the nearest express train. He once decorated his bachelor pad with photos of Alan Greenspan. And while studying for his chartered financial analyst certification, he wooed his then-girlfriend (who is now his wife) by having her carry flashcards with CFA topics.

Mayo often revels in his interloper status, but it would be wrong to say that he doesn’t care about what other people think of him. He cares deeply about setting the record straight, and at times he seems to have a persecution complex. One example of this is in his account of a public row he had with Jamie Dimon, the chief executive of JPMorgan Chase (JPM). Clearly his dispute with Dimon — which focused on whether or not Mayo had accurately rated Bank One and JPMorgan correctly — took a psychological toll on Mayo. He perceives two comments made by Dimon, spread out over as many years, as a coordinated attack. In all likelihood, they were offhand remarks made by a CEO known for making audacious, showman-like statements, and who had a lot to prove after being fired from Citigroup (C). What better way for Dimon to show that his bank was firing on all cylinders than to say that the likes of Mike Mayo, the Street’s most circumspect analyst, had been forced to change his rating from sell to buy? But the comments are personal for Mayo, and he describes in great detail his obsession with settling the score.

Exile also gets bogged down in a two-chapter discussion of Citigroup, which comprises nearly a fifth of the book. While Citi has no doubt had many problems, and continues to struggle along with its peers, shoehorning a full history of the bank in a book about Mayo’s career feels clunky and out of place. Given the fact that Mayo has been embroiled in a long-running fight with Citi management, the detour into Citi (Part I: A Long, Sad Saga; Part II: The Plot Sickens) also feels like a rather tedious act of vengeance.

But for the most part, Mayo’s book is a good story about a strange and fascinating career. It’s well-written, fast-paced, and often very entertaining. It’s a great inside look at Wall Street’s inner sanctums through the eyes of an outsider.