Citibank, Bank of America Join the american bank Profit Parade after Goldman sachs and Morgan stanley
The revival of Wall Street’s financial health progressed today as Citigroup and Bank of America delivered billions of dollars in profits, though the two struggling banks relied on large one-off asset sales to bolster their earnings as bad debts mounted on credit cards and mortgages.
Citigroup, which will soon be one-third owned by the US government under a complex debt-for-equity swap, announced a $4.3bn (£2.6bn) quarterly profit, compared with a $2.5bn loss for the same period last year. Its figures included a $6.7bn boost from spinning off its Smith Barney brokerage into a joint venture with Morgan Stanley.
The company, like Goldman Sachs Group Inc. and JPMorgan Chase & Co., said it had a handsome profit from its trading business. The company acquired Merrill Lynch & Co. this year
So The QUESTION arises, How did these so miserably failing banks not so long ago, are now delivering a nice profit ?
Bank of America said its mortgage revenue rose following its acquisition of lender Countrywide Financial Corp.
Emboldened and confident, based on the financial policies of the Obama administration and the Wall Street personnel who are carrying them out, that they have a pliant instrument of their interests in the White House, the financial barons are employing the same deceptive accounting procedures and gambling with borrowed money that precipitated the crisis in the first place. They are combining these methods with an escalation of predatory policies that threaten millions of workers with destitution.
Amidst reports that the banks are ramping up their foreclosures of distressed homeowners and sharply raising interest rates and fees on credit cards, some of the biggest institutions over the past week reported strong profits for the first quarter of 2009. Wells Fargo projected a record quarterly profit of $3 billion, ahead of the actual release of its earnings report next week.
Goldman Sachs omitted from its earnings reports the month of December, when it lost more than a billion dollars, on the pretext of a change in the starting month of its fiscal year.
A second major factor in the improved earnings of the banks is reduced costs resulting from mass layoffs. US financial firms have laid off more than 400,000 employees over the past two years, and 148,000 in the final quarter of 2008 alone. In its report, Citigroup said it had cut the size of its work force to 309,000 people from 374,000 at its peak—a reduction of more than 17 percent. The bank has laid-off 13,000 people just since the end of 2008