Pedestrians pass a Bank of America branch in Chicago, Ill.
Pedestrians pass a Bank of America branch in Chicago, Ill. - 
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STEVE CHIOTAKIS: Bank of America lost more than $7 billion in its latest quarter. The bank says that's because of a one-time charge related to credit and debit card reform. On the other hand, investment bank Goldman Sachs reported today it made nearly $2 billion last quarter. So, we're going to dig a little deeper and ask the question: Why the disparity in this morning's earnings? JPMorgan Funds chief market strategist David Kelly is with us live from New York with that. Good morning, David.

DAVID KELLY: Glad to be here.

CHIOTAKIS: All right. Tale of two banks, right? How, generally, are banks doing right now?

KELLY: Well overall the banking situation is actually improving. Obviously we've got a big charge this morning from Bank of America. They decided to recognize some of the future costs they see from financial regulation. But if you look past that charge, what we're seeing from Goldman, Bank of America, from other banks, is a general improvement in capital ratios. They're building up their capital. They're trying to be stronger banks for the future.

CHIOTAKIS: Talk about charge. When you say "charge," what does that mean?

KELLY: What it means is they recognize that various changes in financial reform are going to close off areas of profitability in the future. And so rather than take those losses, or those reductions in profit, as they come, they want to recognize them up front to essentially be honest with the shareholders about what all this is going to mean for them.

CHIOTAKIS: So it's a one-time charge. It's not even really money, right? It's not real money.

KELLY: That's right. It's an accounting entry to say, this is what we think the cost of these provisions will be for our institution.

CHIOTAKIS: Very quickly, David, talk about the foreclosures that we've seen, many of which have been suspended. How are those affecting the banks so far?

KELLY: Well we're still seeing the after effects of the huge financial crisis and the huge bust in the mortgage business. And I think the delay in foreclosures -- some of the put backs of foreclosures where banks actually end up having to buy back the loans themselves -- these things are muddying up the system. And I think they are slowing down a recovery in housing overall. But the big picture is the housing industry will gradually recover and the banks do appear to be gradually strengthening here.

CHIOTAKIS: David Kelly over at JPMorgan Funds. David, thanks.

KELLY: You're very welcome.