Source: M&T Bank

There are few CEOs in this country who genuinely tell things like they are. Warren Buffett is obviously one of them, as documented in our latest free report about his greatest investing insights. Another who fits the bill is Robert Wilmers of M&T Bank (NYSE:MTB), a regional lender headquartered in Buffalo, N.Y.

Indeed, it's no coincidence that Wilmers is one of the few CEOs Buffett has publicly praised, urging shareholders of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) to read Wilmers' annual letter. And it's also no coincidence that Berkshire has a large ownership stake in M&T. According its most recent 13F, the financial conglomerate holds 5.4 million shares of the bank, making it M&T's sixth-largest stakeholder.

What follows is a collection of Wilmers' most notable quotes about banking and bankers from last year's letter, organized around four principal subject matters.

On the role of banks and bankers

As a banker, it has always been my understanding that a bank's core mission is that of extending credit to the ambitious and entrepreneurial, those who have good ideas and the drive to implement them. By their nature, such loans entail risk, but they are entered into with an overwhelming desire to see the interests of all those represented in the Middle American towns, villages and cities throughout the country, both individuals and institutions, advance and thrive.

On executive compensation

The level of executive compensation, despite the questionable performance of the industry through the Great Recession, remains at astronomical levels when compared to the wages of an average American worker.

[T]he average compensation package of the Big Six CEOs stands at 234 times [the average working American]. [The six referenced banks are JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley.]

For the average American, such salaries appear to be simply stratospheric -- making possible a life-style which seems distant to Middle America -- and naturally raises the question of why leaders at a handful of firms that have done so much damage to the economy and to the reputation of our industry continue to enjoy such lofty perks.

An argument can be made that large bank CEO pay packages led the parade toward higher executive compensation at all large public corporations over the last three decades.

Leadership requires sacrifice and the time is right for boards and executives to end the party of their own volition -- to make a sacrifice, to right-size compensation and make clear to the public what the new limits will be.

Our industry cannot ignore the fact that the growing divide between rich and poor, so much the subject of our political discourse, poses a threat to our democracy and social order -- not to mention the association of this issue with the name of banking itself.

On accounting

The confusion and opaqueness that the accounting profession appears to prefer has made it more difficult for an intelligent investor to understand the balance sheets and income statements of many banks.

[I]n the third quarter of 2011, 61% of the $22.0 billion pre-tax income reported by [JPMorgan, Bank of America, Citigroup, and Wells Fargo] was nothing more than an artifact of their own bonds dropping in value. When a company's debt declines in value, it should not result in management reporting gains on debt that it is less likely to repay.

At present, we have an accounting system that is too complicated to understand, confuses more than it resolves, and operates in a manner that has been beneficial mostly to itself.

On regulation

[T]o judge by the ongoing growth and extent of bank regulation, there is less focus and appreciation of banks as providers of potential benefits than as sources of potential problems.

[A]s the wages of financial sins are visited on banking as a whole, the image and, crucially, the nature of regulatory oversight -- and the low level of public confidence in the industry -- is principally influenced by questionable activities associated with the largest banks [the six identified above].

The onslaught of new regulations has the combined effect of significantly inhibiting and raising the cost of the services, including lending, which the economy so much needs and which banks are being hectored to provide. Indeed, we might consider this a kind of misguided regulatory chemotherapy -- where the treatment meant to eliminate cancer cells damages healthy ones in the process.

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