Yesterday we got wind of an extended whine by the elites of the financial world, angered by the President… calling them mean names, or suggesting they might have had a role to play in the crashing of the economy, or something. Certainly, they could not be lamenting about the Administration hindering their profitability, because that’s going along just fine, thank you:
Bank profits jumped 21 percent last quarter to nearly $22 billion, the highest level in three years, as banks put away less money to cover future losses, fewer borrowers fell behind on payments and lenders paid the least for their funds in perhaps 50 years, a government report released Tuesday shows.
Lending also dropped by about $96 billion, or 1.3 percent, as borrowers continue to remain skittish about the “slow recovery,” Federal Deposit Insurance Corporation Chairman Sheila Bair told reporters Tuesday in Washington. “Consumers and businesses need to have confidence in the recovery before they will start making decisions on credit,” Bair said, according to a transcript of her remarks […]
It also helps that banks’ cost of funds — the money they pay to garner deposits and other funds that are then used to lend, invest or trade — dropped to the lowest rate in 26 years of FDIC quarterly records. Banks paid 0.97 percent in interest for their funds, the first time they’ve paid less than one percent during a quarter since at least 1984, FDIC documents show.
Historical records on commercial banks’ cost of funds going back to the inception of the agency in 1934 show that the last time banks paid less than one percent for the year was 1960.
Community banks have started to increase their lending a bit, but the mega-firms haven’t – they’re basically using cheap money to profit while the economy stagnates. And these are the people angry at the President!
Meanwhile, if you get to the nitty-gritty of what perturbs the Masters of the Universe so, you’d find that it’s more about their personal financial situations, and what they stand to lose if the Bush tax cuts gets repealed (aside from a little bit of working the refs to achieve favorable outcomes). On that front, Wall Street has started to prepare by secreting out bonuses early:
Banks are considering paying annual bonuses early this year to lessen the impact of the increased tax rates expected in January, when bonuses are traditionally paid out, reports the Wall Street Journal.
Rumors of the hurry-up bonuses on Wall Street come on the heels of Credit Suisse’s reported plan to pay 400 managing directors in its London office a cash reward next month in lieu of a chunk of their 2009 bonuses. The bank’s aim, according to a Bloomberg report, was to spread the cost of a one-time 50 percent tax levied on bank bonuses in the U.K.
Again, if you want to understand the motivations of people who trade money for a living, money’s a good place to start.