It’s like the good old days. Never mind that $6 billion trading loss at JPMorgan Chase, or settling with the government over bad mortgages, the money is pouring in.
JPMorgan Chase, the country’s biggest bank by assets, saw earnings soar 53 percent last quarter over the year before. Earnings were way up at Goldman Sachs too.
So, can we all just relax now? Economy is back in shape?
“All you can tell from JPMorganChase and Goldman Sach’s earnings is that they’re doing well,” says William Cohan, a former banker and the author of “Money and Power,” a book about Goldman Sachs.
He says these stellar earnings are partly because there’s less competition since the financial crisis. JPMorgan and Goldman Sachs are considered the cream of the banking crop, and are sucking up business. And, he thinks the banks are propped up by government policies that keep interest rates low.
“It’s like a morphine drip in the arm of the credit market,” says Cohan.
But that drip does appear to be helping the economy in some ways. JPMorgan’s earnings showed more credit card spending. And, more business and mortgage lending. Homeowners might have extra cash as more refinance at lower rates.
“That’s going to help offset the reduction due to the social security increase that’s affecting all wages and salaries,” says Mike Moebs, a banking economist.
Still, the economy appears fragile.
“There seems to be a reluctance on the part of these bank CEOs to say look, a much better economy is clearly on the way,” says Nancy Bush, a banking analyst.
And, even though JPMorgan’s earnings were solid, its CEO Jamie Dimon will be earning less. The bank cut his bonus by half following that big trading loss last year.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.