When I was a risk manager at KeyCorp in the 1990's, it was really a two-bank town, National City and Key. Because of Key's penchant to buy things for, oh, $700MM that were really worth $150MM, Nat City generally generally outperformed when I was there. But things changed, and as Nat City didn't do well in the last recession, the recent slump put a knife in their heart.
I have fond memories of KeyCorp. Like any large corporation, there was a lot of inefficiency, lots of Dilbert-style managers who knew very little about their jobs. But as I found when I went to work in the New York, and talked to other banks, I found that is is true at every big bank, even the ones in London and New York. In fact, the banks that had big, high profile investment arms tended to really not understand the bread and butter commercial and consumer lending as well, because investment banking dominated their view of things, and so up top you had people with no intuition for basic regional banking (commercial and consumer lending is not like running a portfolio of traded securities, or facilitating an IPO), and their best people all wanted to be on the cover of Intitutional Investor (i.e., investment bankers).
So it if fun to note that old Key might end up owning Nat City in the end. They have weathered the recent storm better than most (due to legacy principles I instilled in their risk management, of course!). I remember thinking, as the subprime disaster was happening, that we never made loans like that when I was there (no money down, reverse principal amortizing, no income verification), and I guess they still don't to any significant degree.
Speaking of banking, it was funny when in Bernanke's testimony today, they talked about some ideas for regulating sub-prime, and Bernanke said, well, the problem loans in question can't be securitized anymore. Meaning, that mistake, subprime residential, is, like all excesses, a one-timer. Regulators are always focusing on the mistakes of the immediate past, and five years after the fact they have new legislation focused like a laser beam on, say lending to telecoms with inflated income statements. The next bust is never like the last, except in the broad sense that people expected certain collateral to stay stable, if not keep going up. But it was hotels and commercial real estate in 1990, telecom in 2001, and now residential mortgages. I guarantee the next bust will not be in telecom or residential mortgages because the experience of failure is just too fresh in the participant's minds.