Occupiers Get Their Wish

The Occupy Wall Street movement seems to have gotten what they asked for, though they might be unaware themselves. If they have been following the financial news, which is admittedly tough when you spend most of your time complaining, they will have heard of the dismal earnings posted by almost all major U.S. banks over the past week.

JPMorgan Chase and Wells Fargo suffered from a decline in interest spreads. Goldman Sachs was hit by losses in private equity. Citigroup, Morgan Stanley, and Bank of America posted gains, but they were made  through accounting loopholes rather than strong performance. 

Facing a flattened yield curve and muted demand, banks have been unable to capitalize on near-zero deposit rates, spelling a dismal outlook for the U.S. economy. Goldman Sachs posted a quarterly loss for only the second time since going public in 1999, with revenues plunging by 60% compared to 2010’s third quarter.

Despite also seeing third-quarter profits fall by around 33% over the year, JPMorgan nevertheless surpassed Bank of America to become the largest U.S. bank, in terms of total assets. Competition today appears to be as much about growing as it is about resisting decline.

Although Bank of America posted strong returns, along with Citigroup and Morgan Stanley, these results were inflated by clever accounting and one-time tricks. And regulatory costs set off by the Dodd-Frank act will only serve to stifle a true recovery.

So you Occupiers, rejoice, as the country’s financial engine stutters and the economy creeps back towards recession.

–Thomas L. Hauch