Wow. One would think from reading the headlines that the US Banks are in deep trouble. Below you will find two headlines from the Wall Street Journal. They make the bank conditions seem ominous.
And, that’s a problem. Because most folks get their news from TV- or only read the headlines and a line or two. So, they would believe that the banks are, indeed, taking a hit.
But, the reality is very different. Part of the problem with the banks’ profits are legal fees. As in- damned, they got caught stealing money from US citizens and finally being fined- big time- by the Feds. Wait, give me a chance to drop a tear for that.
Or, that investors were disappointed that Wells Fargo only increased its profits by about 4%. Its gross revenue had dropped from $ 21.4 to $ 21.1 billion. OK, that’s a drop- but they still managed to increase their profits.
And, let’s really consider the numbers above. Wells Fargo’s profits for the second quarter was $ 5.7 billion. Consider that number again. Don’t get mesmerized, but really think about it. Those profits are about $ 435 million a week!. Or, since banks only work 5 days a week, that means Wells Fargo’s profits were $ 90 million per working day of the quarter. Really? I should worry about Wells Fargo? The largest US bank by capitalization or the 4th largest by assets?
After all, corporate profits- that businesses AND the banks had a profit drop of about 9%- but we should worry that Wells Fargo increased its profits on lowered revenue?
And, that’s the real problem. We have let these banks merge, take over others, and thereby control our economic progress. And, then these same entities cheat their customers (that’s you and me, folks), overcharge them, provide poor customer service, and pay record fines.
Yep, I worry that some of their profits were only $ 90 million per day of operations. Don’t you?
