Bank customers may be hurting, but banks doing fine
If you want to keep score, here's how some of the nation's biggest banks are faring:
- JPMorgan Chase & Co:Reported a $3.59 billion profit in third-quarter earnings (between July and September). It's a pretty neat hat trick, given that they said they had to double the amount of money originally set aside for failed home and credit card loans. But it's investment banking that's bringing in the profits.
- Goldman Sachs: Earned $3.19 billion in profit in the same period, which is almost the most it has ever made in a three-month period. The company is doing so well, I'm thinking I definitely went into the wrong business, no matter how much I enjoy my life as a writer. The Wall Street Journal reports that the bank's 31,700 employees are poised to earn an average of $700,000 each in 2009, which is a record for the 140-year-old firm.
- Citigroup: Managed a profit of $101 million in the third quarter of the year. Compared to JPMorgan and Goldman, these profits almost make Citigroup look like a slacker.
Not that every bank is doing great. Bank of America just posted a $2 billion loss. But that just makes the other bank's successes all the more impressive or surreal. So how are they doing so well, given that this year has not been, economically-speaking, the greatest?
They're all pulling in their profits from investment banking, which is interesting -- and I'm hardly the first to point this out -- because in the old days, banks did well when their customers did well. When their customers fared poorly, banks did, too. In fact, that's why banks were in so much trouble last year and taxpayers had to bail them out.
Now banks are pulling in profits, not because their average customer is succeeding, but because of their elite customers, the ones who make an average of $700,000 a year.
And yet they wouldn't be doing so well with Wall Street, if those customers on Main Street hadn't bailed them out in the first place. It's an odd little piece of irony that almost makes one's head hurt.
Geoff Williams is a frequent contributor to WalletPop and covers banking as one of his regular beats. He's also the co-author of the upcoming book, "Living Well with Bad Credit."