Kai Ryssdal: And we begin today with a tale of two banks: Wells Fargo and Citigroup.
2011 was very, very good to Wells Fargo -- it posted record profits for the fourth quarter and for the year. Despite the stubborn housing market, it somehow managed to make good money in mortgage finance.
Citigroup, however, not so good. An 11 percent drop in quarterly earnings, traceable, it says, to a slump in revenue from trading stocks and bonds.
Even though the raw data on the economy kept improving through the year, our senior business correspondent Bob Moon explains things are still shaky for the banking industry.
Bob Moon: First and foremost, analysts blame Europe. They say investors have been sitting on the sidelines, waiting for the European debt crisis to be resolved. Until that happens, investment banks will find it tough to turn a profit.
Todd Schoenberger: When you look at companies that focus more on trading, as well as investment banking, those are the ones that are taking a big hit.
Todd Shoenberger is managing director at LandColt Trading.
Schoenberger: You have to suspect that trading volumes will continue to be anemic through the rest of the year. Merger and acquisition activity, investment banking activity will continue to be benign, so we have to wonder where the dollars are going to come from.
And Schoenberger says healthy banks continue to be vital to a healthy recovery.
At South Beach Capital Markets, Bruce Foerster says today's Citigroup numbers suggest the financial giant might make a healthier profit by just spinning off its investment banking business. He says investment banking has also been hurt by another waiting game. Regulators are still sorting out the financial reforms passed by Congress a year-and-a-half ago, in the Dodd-Frank bill.
Bruce Foerster: You still have this huge regulatory cloud. What does Dodd-Frank really mean? Well, I think it means this. You stop 10 people on the street -- if you can find ten people that even know what Dodd-Frank is -- and you're going to get ten different views on where it's going take the business. Uncertainty makes it difficult to run the business.
Analysts say Wells Fargo has found success going in another direction. It's turned a profit on its mortgage business by focusing largely on loans to the most credit worthy of home buyers. But it's far from clear that there's enough of that business to go around, and boost the bottom lines of its rivals, as well.
I'm Bob Moon for Marketplace.