Can B of A earn its way out of trouble?

Amy Scott Jul 17, 2009
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Can B of A earn its way out of trouble?

Amy Scott Jul 17, 2009
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Stacey Vanek-Smith: Today wraps up a very important week for U.S. markets. A lot of major bank earnings came out. So far, so good. JP Morgan Chase and Goldman Sachs announced huge profits. Later today, we’ll hear from Citigroup and Bank of America. There is a key difference for those banks. They haven’t been able to pay back TARP money from the government bailout. So can we expect more good news from B of A and Citi? Marketplace’s Amy Scott takes a look.


Amy Scott: Banks are making money these days, in part thanks to a surge in investment banking. Things like trading stock and doing bond deals.

Nancy Bush is an analyst with NAB Research. She says Bank of America has benefited from its controversial buyout of Merrill Lynch.

Nancy Bush: They have this much larger investment banking platform at a time when investment banking is doing fairly well.

But can B of A earn its way out of trouble? The bank accepted $45 billion from the Treasury Department to help absorb losses on loans and credit cards.

Paul Miller keeps an eye on the banks for FBR Capital Markets. He says regulators won’t let Bank of America or Citigroup pay their bailout money back anytime soon.

Paul Miller: I would think that they will not be able to pay TARP until we get through this recession or we see some stabilization on their losses in their portfolio. And that could be another year, tops.

Miller says even stronger banks like JP Morgan Chase will continue to lose money on bad loans until the economy recovers.

In New York, I’m Amy Scott for Marketplace.

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