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When falling bank profits can be a good thing

Lower profits could be a sign that banks are taking smaller risks.

Big banks are reporting disappointing earnings this week, in large part because of falling revenue from bond trading. That’s bad news for banks and their investors, but might not be so bad for the rest of us, some economists say. It could be a sign that regulations are reducing risk, as long as falling profits don’t encourage banks to seek higher returns elsewhere. 

 

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