Thanks Obama: US Banks Report Record Profits in Q3

[TownieDeac]

http://www.wsj.com/articles/u-s-banks-report-record-profit-in-third-quarter-1480433459

WASHINGTON—The nation’s commercial banks and savings institutions reported a 13% rise in net income in the third quarter, hitting a record as institutions’ profits soared and expenses moderated.

Net income at the 5,980 banks insured by the Federal Deposit Insurance Corp. rose $5.2 billion, to $45.6 billion, in the third quarter, compared with a year earlier, according to data released Tuesday by the FDIC.

“The banking industry reported another positive quarter,” said FDIC Chairman Martin Gruenberg. “Revenue and net income were up from a year ago, loan balances increased, asset quality improved, and the number of unprofitable and ‘problem banks’ continued to fall.”

The rise in net income was due in part to a $10 billion increase in net interest income, up 9.2% from a year earlier, and a $1.2 billion gain in noninterest income, a 1.9% increase as trading revenue improved at large banks. One-time accounting and expense items at three institutions also had an impact on the growth of income, the agency said.




But Dodd-Frank is killing banks!!!!1!!

 

[WakeandBake]

Obama blew it on banking. This is fucking disgusting

 

[simosfrostyone]

Hillary would have put a stop to this. She never cozied up to them or took their money.

 

[TownieDeac]

Hillary would have put a stop to this. She never cozied up to them or took their money.

Bingo. Major reason she lost. Of course, Trump is no better, but he paid lip service to the vague idea of banking elites stealing from the middle class.

 

[knowell]

Obama blew it on banking. This is fucking disgusting

Do you want the banking industry not to show a profit?

 

[TownieDeac]

Do you want the banking industry not to show a profit?

All industries should have profit driven goals.

Where Obama failed is in stopping the next crisis from happening the exact same way as the previous one.

 

[WakeandBake]

Do you want the banking industry not to show a profit?

Not the kind of profits they have been making, no.

 

[PhDeac]

On its own, banks doing well isn't a sign that the next crisis is upon us.

 

[WakeandBake]

The financialization of the American economy is not a good thing.

 

[RJKarl]

One of the worst things Obama didn't do was not having a few hundred perp walks of bankers and Wall Street bosses.

 

[knowell]

Not the kind of profits they have been making, no.

How much should they be allowed to make?

 

[WakeandBake]

How much should they be allowed to make?

lol ah the quasi-libertarian. I think the financial sector runs away with capital and is a driving force in income inequality. The larger the percentage of GDP the financial sector claims, the worst it is for those Wisconsin and Michigan and western Penn working-class voters you care so deeply for.

 

[knowell]

lol ah the quasi-libertarian. I think the financial sector runs away with capital and is a driving force in income inequality. The larger the percentage of GDP the financial sector claims, the worst it is for those Wisconsin and Michigan and western Penn working-class voters you care so deeply for.

Pretty sure you do not have a PHD in economics with that response.

 

[TownieDeac]

On its own, banks doing well isn't a sign that the next crisis is upon us.

The financialization of the American economy is not a good thing.

One of the worst things Obama didn't do was not having a few hundred perp walks of bankers and Wall Street bosses.

I agree to varying extent with all these posts.

I understand our culture and the culture of most of Western Europe is very much based on credit and not savings at this point. That seems nearly impossible to address at the policy level. Credit is good; it's a ladder to success whether it means borrowing for school or a car or a house. We aren't ever going to be Germans with a big trade surplus because we save so well and don't buy luxury goods. We can't ever have a Mittelstand system.

Still, there are forces in this country who want to further deregulate the banking industry, our new president elect likely among them. Dodd-Frank is getting neutered as we speak. What few consumer protections Obama tried to implement to save us from ourselves will also likely be eroded in the next administration. It's why there's alarmism about putting a Goldman guy in the cabinet.

 

[ImTheCaptain]

 

[WakeandBake]

Pretty sure you do not have a PHD in economics with that response.

You're right, I do not. Did Ayn Rand? Tell us more about your libertarian banking utopia, its fascinating stuff. And be sure to keep it in context with the lesson we Dems are supposed to be learning about the election vis a vis the working class voters who eschewed Clinton for Trump.

I have no Phd and I am not an economist, but I try to read what I can and over the years I have read that while it can ostensibly drive up economic growth, it is not necessarily healthy growth. It is in an economy's best interest - if they are itnerested in sustained growth and expansion of the middle-class and incomes for its citizens - to keep the financial sector in check through close regulation, lest it become so large it, you know, starts to run the economy and dictate its outcomes in its own favor (what a crazy notion).

A 1 minute google search:

Financial services (banking, insurance, investment, etc.) have become a key industry in developed economies, in which it represents a sizeable share of the GDP and an important source of employment. Those activities have also played a key role in facilitating economic globalization. In the wake of the 2007-2010 financial crisis, a number of economists and others began to argue that financial services had become too large a sector of the US economy, with no real benefit to society accruing from the activities of increased financialization. Some, such as former International Monetary Fund chief economist Simon Johnson, went so far as to argue that the increased power and influence of the financial services sector had fundamentally transformed the American polity, endangering representative democracy itself.[9]

In February 2009, white-collar criminologist and former senior financial regulator William K. Black listed the ways in which the financial sector harms the real economy. Black wrote, "The financial sector functions as the sharp canines that the predator state uses to rend the nation. In addition to siphoning off capital for its own benefit, the finance sector misallocates the remaining capital in ways that harm the real economy in order to reward already-rich financial elites harming the nation."[10]

In testimony before the US Congress in March 2009, former Federal Reserve Chairman

“ Alan Greenspan has proclaimed himself "shocked" that "the self-interest of lending institutions to protect shareholders' equity" proved to be an illusion.... The Reagan-Thatcher model, which favored finance over domestic manufacturing, has collapsed. ... The mutually reinforcing rise of financialization and globalization broke the bond between American capitalism and America's interests... we should take a cue from Scandinavia's social capitalism, which is less manufacturing-centered than the German model. The Scandinavians have upgraded the skills and wages of their workers in the retail and service sectors -- the sectors that employ the majority of our own workforce. In consequence, fully employed impoverished workers, of which there are millions in the United States, do not exist in Scandinavia.[11] ”
Emerging countries have also tried to develop their financial sector, as an engine of economic development. A typical aspect is the growth of microfinance or microcredit.

On 15 February 2010, Adair Turner, the head of Britain’s Financial Services Authority, directly named financialization as a primary cause of the 2007–2010 financial crisis. In a speech before the Reserve Bank of India, Turner said that the Asian financial crisis of 1997–98 was similar to the 2008–9 crisis in that "both were rooted in, or at least followed after, sustained increases in the relative importance of financial activity relative to real non-financial economic activity, an increasing 'financialisation' of the economy."[12]

Bruce Bartlett summarized several studies in a 2013 article indicating that financialization has adversely affected economic growth and contributes to income inequality and wage stagnation for the middle class.[13]

https://en.wikipedia.org/wiki/Financialization

Abstract
Financialization is a process whereby financial markets, financial institutions and financial elites gain greater influence over economic policy and economic outcomes. Financialization transforms the functioning of economic system at both the macro and micro levels. Its principal impacts are to (1) elevate the significance of the financial sector relative to the real sector; (2) transfer income from the real sector to the financial sector; and (3) increase income inequality and contribute to wage stagnation. Additionally, there are reasons to believe that financialization may render the economy prone to risk of debt-deflation and prolonged recession. Financialization operates through three different conduits: changes in the structure and operation of financial markets; changes in the behavior of non-financial corporations, and changes in economic policy. Countering financialization calls for a multi-faceted agenda that (1) restores policy control over financial markets, (2) challenges the neo-liberal economic policy paradigm encouraged by financialization, (3) makes corporations responsive to interests of stakeholders other than just financial markets, and (4) reforms the political process so as to diminish the influence of corporations and wealthy elites.

http://scholarworks.umass.edu/peri_workingpapers/135/


In short, the fucking bankers are fucking fleecing America. :noidea:

 

[ImTheCaptain]

Pretty sure you do not have a PHD in economics with that response.

so only the educated elite should lead us, huh

 

[aocs3281]

Not the kind of profits they have been making, no.

The profits do not seem out of line given the amount of capital it takes to run a bank. ROE for the sector is low relative to many others.

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/roe.html

 

[WakeandBake]

I'm calling out Obama, and in turn Hillary, for not doing shit about financialization, and the supposed defenders of the working class who now support Donald Trump and laud his election as some stroke of genius in messaging - are applauding banks pulling in exorbitant profits while the Wisconsinites are struggling. this makes no sense. They argue both sides with no mooring whatsoever.

 

[knowell]

I'm calling out Obama, and in turn Hillary, for not doing shit about financialization, and the supposed defenders of the working class who now support Donald Trump and laud his election as some stroke of genius in messaging - are applauding banks pulling in exorbitant profits while the Wisconsinites are struggling. this makes no sense. They argue both sides with no mooring whatsoever.

I fail to see how adding regulations to banks making it more difficult to lend to home buyers or entrepreneurs will help the blue collar workers in Wisconsin.

According to AOCS chart, banks were bringing in about 9% return on investment. What would be a more appropriate number?