Friday, January 22, 2010

"this is a phenomenally good time to be a bank"

Floyd Norris notes the huge discrepancy between the return banks have been getting on "their" capital and the returns they have been "offering" to depositors, and concludes "this is a phenomenally good time to be a bank."

Here is what JPMorgan Chase’s chief executive said in the company’s earnings announcement today:

“We are gratified that we generated earnings of $3.3 billion for the fourth quarter and nearly $12 billion for the year. Those these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential.”

Chase today is offering a rate of 0.01 percent on savings accounts, although it will go all the way up to 0.75 percent if you keep $500,000 in the account. [And, he notes, charge you fees for the privilege, thus reducing that meager return.]

One "problem" Norris pinpoints for the banks is that "bankers today are hated and resented by a lot of people".

Go figure.

And for further proof of what a good time this has been of late for banks, go read Jeff Mathews' explanation of the little game played and won by Goldman Sachs in one recent stock deal: Goldman 8, Public 0.

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