No Surprise Over Wall Street Profits
After months of dismal news coming out of Wall Street, a few rays of light have shown through in recent days. Last week, Wells Fargo announced a $3 billion
Jul 31, 20202.5K Shares2.5M Views
After months of dismal news coming out of Wall Street, a few rays of light have shown through in recent days. Last week, Wells Fargoannounced a $3 billion profit in the first three months of 2009, and yesterday Goldman Sachssaid it made $1.8 billion over the same span.
But at least one prominent economist isn’t impressed. Instead, University of Maryland professor Peter Morici, a familiar face on Capitol Hill, wrote in an e-mail that the profits should come as no surprise in light of the billions in bailout funds raining down from Washington in the past six months.
“„The Federal Reserve has permitted the banks and financial houses to park vast sums of unmarketable paper on its books—securities made nearly worthless by the misjudgment and avarice of bankers. In return, the Fed has provided these scions of finance with fresh funds, cheaply, that they may lend at healthy rates on credit cards, auto loans and even mortgages.
And that would be OK — indeed, it was the goal of the bailout — except that lenders aren’t lending at healthy rates. Instead, there’s plenty of anecdotal evidencethat they’re bumping up fees and rates on responsible borrowers to bolster profits.
“„While the Fed cuts the banks slack, the bankers are busy turning the screws on their debtors by raising credit card rates and fees, and harassing distressed borrowers with all the zeal of the Roman army sacking Palestine.
By contrast, Morici wrote, Detroit’s automakers weren’t treated nearly so well — a function of their lobbying powers, not their business prowess.
“„The contrast between how the banks and car companies are treated is the product of political acumen, not financial skills, at Goldman Sachs and other banks. Feeding the campaign machines of both political parties and lavishing speaking fees on future White House economic advisors, these financial wizards have managed to purchase preferred treatment in our Capital.
Think of that as you pay your taxes tomorrow.
Camilo Wood
Reviewer
Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing.
Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers.
Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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