US bank profits back to pre-crisis heights

[Hannah Bell]

US bank profits returned to their pre-crisis heights in the second quarter of this year, according to a report released Tuesday by the Federal Deposit Insurance Corporation (FDIC), the regulatory agency that insures consumer deposits at commercial banks.

Profits reported by the 7,830 banks overseen by the FDIC totaled $21.6 billion for the three months to June, compared to a $4.4 billion loss in the second quarter of 2009. It was the banks’ highest quarterly profit since the third quarter of 2007, when the subprime mortgage market began to collapse.

The profit surge went disproportionately to the nation’s big banks, which have been the main beneficiaries of the bailout policies of the Bush and Obama administrations. The same FDIC survey reported a further increase in the number of failed banks and those at risk of failing, overwhelmingly from among small and mid-sized banks.

http://www.wsws.org/articles/2010/sep2010/bank-s03.shtml

[FBaggins]

1. They are nowhere NEAR their "pre-crisis heights"

"Highest since the collapse" and "back to their highs" are not at all the same thing. The best quarter since the collapse was (IIRC) a little less than $20B in early 2008, but that Q3 2007 number was just under $30B (so $21.6B is hardly back to even that point... but the pre-crisis highs were almost $40B/quarter.

On top of that, about $8B of this past quarter's profits are really just accounting gains from reducing allowances for loan losses as the economy recovers. We'll see quite a bit of that in the coming quarters if the recession doesn't relapse... but they're not "real" profits. Bank of America, Chase, and JPMorgan each "earned" $1.5 Billion last quarter that way. The JPM CEO said it best: "we don't consider that earnings... I've always called that ink on paper. It means nothing, O.K.?"

If you back out that $8Billion, it wasn't even the best quarter during the collapse.

[Hannah Bell]

3. "It was the banks’ highest quarterly profit since the third quarter of 2007"

[FBaggins]

5. And that isn't the same thing

as "back to pre-crisis heights"

The pre-crisis heights were pretty consistently in the $35-40B range for almost three years running.

[Regret My New Name]

4. I was trying to find some data about this...

Does this look relevant? http://yfrog.com/4w28245540j I could very well be looking/reading this all wrong.

[FBaggins]

6. Yes. That's the relevant comparison n/t

[sendero]

2. As long as you ignore the fact..

... that they don't have to mark to market the trillions of toxic "assets" they still hold, the banks look pretty good.

Is it possible, and it this case the true fact, to have an operating profit while your actual balance sheet is red, red, and red.

[blindpig]

7. k&r