That’s the gist of the letter I received from J.T. last week (or at least the part I can repeat in polite company).

“America’s great financial houses and banking institutions are not about growth. They are about the responsible stewarding of investor’s funds. In other words, it’s an income play!”

Soooo after years of…

• Round-robin rock-star recommendation parties in which various Wall Street outfits laud each others’ brilliance -- and each others’ stocks…

• Enormous share price run-ups…

• CEO bonuses larger than the GDP of a small island nation (and certainly larger than the increase in our own GDP)…

• The wasting of trillions of dollars on worthless mortgage bonds…

• A banking collapse that might yet rival the Great Depression’s…

• The total destruction of investor confidence…

• A massive share price collapse, and the triggering of an official bear market…

… Now I am supposed to believe that the whole time Wall Street was actually all about the conscientious provision of retirees’ income.

Now I think that it is rather obvious that the financial sector is not about growth right now. But rather than simply call them all cads (again), and my fine correspondent a poor dupe, let’s take a look at his claim that they are sturdy purveyors of income for retirees, widows and orphans.

So far in 2008, 19 financial service outfits listed on the S&P 500 have slashed their dividends. The latest: Wachovia (WB:NYSE) and Regions Financial (RF:NYSE) announced last week that they would take out their losses on those aforementioned widows and orphans.

“Get serious, Lass,” my correspondent might say. “We all know that times have been rough and these guys need to raise capital in the worst way. But why get your knickers in such a knot when 19 is such a slim minority? And surely this is as bad as it’s going to get. Guys like Bank of America (BAC:NYSE) CEO Ken Lewis have assured us that they are ‘committed not to cut dividends.’”

Oh, my knickers are knotted all right, and here’s why: If you toss all 165 of the remaining financial houses’ dividend increases into the pot with the 19 cut payouts, that kettle would still come up short.

Plain and simple: The minority’s $14.4 billion in dividend cuts overwhelm the majority’s $13.4 billion in increases, leaving investors all the poorer.

Oh, and as for Mr. Lewis’ claim that BAC would not join the ranks of cutters? Read the fine print, my friends. He followed that bold statement with a mealy-mouthed “It’s hard to be unequivocal on anything.”

Now, the rubber usually hits the road for BAC, dividend-wise, on the fourth Wednesday in July. So needless to say, I was watching the wire rather carefully to see if Ken would shrug off BAC’s 40% drop in profits and still deliver up BAC’s 31st annual dividend increase.

I must laud Mr. Lewis for splitting this Gordian knot so neatly: BAC joined neither the raisers not the cutters. Rather, the next quarterly dividend will be 64 cents, just like the past four. However, his efforts are not enough to stem investors’ income losses nor will they refill our orphans’ stew kettles.

I am sorry, J.T., but currently the big bankers represent neither income nor growth. But they do represent opportunity.

As I sit to write to you, BAC shares have fallen some 16% since the publication of Mr. Lewis’ reassuring platitudes, pushing WOW readers puts against same to max gains of 64% in a bit less than a week. These gains are not unique. WOW puts against Bank of New York Mellon (BK:NYSE) are also up 81%.

My recommendation is, of course, to continue shorting this entire group as a whole.

Sincerely yours,

Adam

P.S. Taipan Daily works best when it is a conversation among peers. With that in mind, I have created a new e-mail address, This e-mail address is being protected from spambots. You need JavaScript enabled to view it , with a specific purpose: It is your direct conduit to my desk.

You can use it to ask me anything you like, from the direction of the market to the price of tea in Des Moines.

Keep in mind that really odd thoughts may get ignored, while compliments may find their way into promos. Also, I can't give you personal investment advice, 'cause that makes the Feds really mad.