Banks drive stock market up with bail out money while loans are hard to find
The recent huge profits by the leading banks which were made from trading, all while they loaned very little money to us, the people, made me thinking. And I am a reasonably smart man and sometimes can put two and two together. On a few rare occasions, I can even put two and two, and two, and then some together. So both, Bank of America and Citigroup, which are basically the largest and the fourth largest banks in the U.S. with Wells Fargo and JPMorgan Chase sandwiched in-between, turned rather spectacular profits in the first quarter of 2010. You would think that both banks made the bulk of their profits with old fashioned business model - by lending depositors cash to the good people looking to buy homes and build or expand small businesses. Nothing can be further from truth. While Bank of America mortgage arm set aside almost $10 billion USD to cover continuing loan losses, the profits counting some $7.2 billions have come from active trading in the bond and stock markets.
Thus you can now understand who or what drives the markets day after day, after day. The banks have been trading all the way to record profits probably using a nice chunk of taxpayers money. Yep, banks got the bail out funds which is ours fundamentally, haven't given too many loans back to us, and stock market is going through the roof while according to every estimate I have read, the small investors, and that would be us again, are sitting quietly and holding tightly on whatever little money we have left after the most recent economic disaster. If the April reading from University of Michigan indexed poll of consumer sentiment can be trusted, the mood is rather gloom. It has come in at its lowest levels in over a year. Worse yet, the poll by Pew Research Center on government trust topped that as it places sentiment regarding the competence of our leaders at a 50-year low.
Thu Apr 22, 2010 06:04PM | Copyright: www.bad-credit-advisor.com | More in Economy | Comments (0)
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