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Wells Fargo and JPMorgan Chase: Is it time to stop worrying about them?

Since the financial crisis, JPMorgan Chase and Wells Fargo have reported healthy report quarterly earnings. So can we finally stop worrying about the health of our financial system?

Updated (9:30am EST): Friday morning, megabanks JPMorgan Chase and Wells Fargo reported positive earnings. Wells Fargo said its profits were up 23 percent last quarter, and at JPMorgan Chase, profits jumped 34 percent compared with a year ago.

Big banks have come a long way from when they and the entire financial system were on the verge of collapse. Major U.S. banks have largely had healthy balance sheets recently, with record profits. This leaves Americans to wonder whether it’s finally safe to let go of fears that they could again threaten to fail and drag the entire economy down with them.

“I definitely don’t think there’s nearly as much to worry about now as there was five or six years ago,” says Morningstar bank analyst Jim Sinegal. “Capital levels at all of the big banks have doubled, tripled or even more since the depths of the financial crisis.”

When there’s literally more money in the bank, there’s less worry about catastrophe. Banks are playing it safer in a number of ways, including much tighter lending standards. (Too strict, in the view of some small business owners, who are frustrated about not being able to get adequate loans for expansion.)

It’s nice to be healthy when the overall economy is recovering. And the big banks did survive the Fed’s latest simulated crisis -- but that’s not the real test.

“We will only find out whether the new situation now is a better one for the country, for the economy, for the consumer when the next crisis comes by,” reminds Mauro Guillen, director of the Lauder Institute at the University of Pennsylvania’s Wharton School.


Click here to hear analysis from Nancy Bush, contribuing editor at SNL Financial.

Mark Garrison: With record profits on the books, life is certainly a lot better for the largest banks.

Jim Sinegal: I definitely don’t think there’s nearly as much to worry about now as there was five or six years ago.

Jim Sinegal is a Morningstar bank analyst. These companies are playing it safer in several ways. For one, there is literally more money in the banks.

Sinegal: Capital levels at all of the big banks have doubled, tripled or even more since the depths of the financial crisis. And that’s the biggest thing contributing to the safety of the financial system.

It’s one thing to be healthy when the economy is recovering. And the big banks did survive the Fed’s latest simulated crisis. But Mauro Guillen of the University of Pennsylvania’s Wharton School has a reminder.

Mauro Guillen: We will only find out whether the new situation now is a better one for the country, for the economy, for the consumer when the next crisis comes by.

It’ll take more than quarterly earnings reports to figure that out. In New York, I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.
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