Bank customers may be hurting, but banks doing fine
Filed under: Banks
Several banks came out this week with the news that their earnings are extremely robust. Recession? What recession? In fact, part of the reason the Dow recently topped 10,000 is credited to how the nation's banks have been doing.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."
Reader Comments (Page 1 of 1)
10-17-2009 @ 11:46PM
Robert Thomas said...
Mr Geoff Wiliams, this is a reply to your article written 7 Oct 2009 about Bank of America not raising its interest rates on customers. Please read my entire reply and see if it is worthy to be published.... people need to be warned about BofA's deceptive practices.
I opened up my BofA Gold Option Line of Credit back in Feb 08 to consolidate older lines of credit to a lower fixed rate to pay them off sooner. I was guaranteed that the line of credit would remain at a fixed interest rate for a set term of months and that was it. That was the only reason I opened the account.
In Nov 08, I called BofA and tried to negotiate a lower interest rate on the LOC, but was turned down. A few days later I receive a letter in the mail saying that "due to a periodic review of my account, it has been closed." My credit score is in the 740s, and I had never missed a payment on any of my debts! I can only assume it was because I called to negotiate for a better rate. I promptly closed my remaining accounts and moved my checking and savings over to a credit union.
Now it is Oct 09, and I have received a letter for BofA saying that my fixed interest rate will now be variable, tied to the prime rate. That is not the agreement I signed on for. I called to opt out of this outrageous change of terms, but was told that it was being done on ALL GoldOption lines of credit and nothing could be done about it. This seems to me to be a case of bait and switch. If I recall correctly, the new credit legislation going into effect soon affects fixed rate interest, but exempts variable rate interest. It appears BofA is changing their terms to circumvent legislation, and something needs to be done about it! The letter I received said the new variable rate takes effect on the first day following the statement closing date in December 2009!
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10-20-2009 @ 9:42PM
Jesse said...
Robert ! I sympathize with you, but know that I also recieved a letter with the same "breech of contract" like yourself. No wonder it took a half hour to speak to a bank rep with no positive results. What do we do now ?
10-19-2009 @ 3:57PM
Tom said...
Regard to over overdraft fees.
Leave this up to the banks not the goverment.maybe people will learn to do right.
my friend recived a speeding ticket last month, the fine was $260.00 he received another ticket two weeks ago . and another $260.00 and yes last week another.He told me from now on I am going to drive the speed limit I can't afford to pay these fines.
Same goes for the late fees and overdrafts people know better
so why do they do it again and again?
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11-20-2009 @ 11:42PM
Mike said...
I wanted to share a story about how banks (Bank of America and Chase) are treating good credit people. Chase Bank just cancelled, without notice, a credit card account of mine I had for years with a high limit but carried a zero balance. I called to complain that I received no notice and was told sarcastically, “it’s in your fine print.” Shocked at the treatment and tone, I asked to speak to a higher person. I spoke to a Habib who explained my credit score (721) was too high. I asked when that became an issue. He said if I was a bad credit risk, a slow payer, etc. he could reopen my account and help me. But since my credit was good, he could do nothing but tell me to reapply. I did apply on line to Chase and even tried to transfer a balance but was denied because I have plenty of credit available though exceeding 50% of total credit really hurts your score and this would result in such occurring. Not only was I denied but then they in turn lowered my limits on OTHER EXISTING ACCOUNTS. This again is hurting my score. Out of protest, I applied to Bank of America where I have another high limit, low interest account for years. BOA turned me down and also lowered my limit on my existing accounts by $11,000. In telling this story at work, my Asst Mgr was 2 days late on a payment which in turn resulted in 8.9% APR turing into 24.9%. He protested. His bank said they would reinstate him to 9.9%. He said no and would talk to them again in 30 days when they were calling for payment as he was holding his payment now. 30 days later they did call. He explained the situation and did not get anywhere. He again told the person he’d speak to the bank in another 30 days as he was with holding another payment. each time he kept the payment in his bank available to pay but was protesting the interest rate. This occurred 3 more times when finally at 180 days he is now getting 0% interest proving if your a good credit risk, your bad.
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