Stumbled across an interesting report from McKinsey that says business as usual is not an option for American banks.
They'll go out of business if they don't change their business models, as average Return on Equity will sink from 11% to 7% by 2015, whilst the cost of equity will reach 9%.
That means banks will be running two points behind their costs and will effectively go out of business if they don't change.
What do they need to change?
The branch-based business model; the payments model; the mortgages model; and FX and OTC trading model.
This is all due to a massive reduction in consumer debt, the increased capital requirements of Basel III and the need to respond to Dodd-Frank legislative impact on fees and trading (Durbin and Volcker).