Posts filed under “Bailout Nation”
I gave myriad reasons in Bailout Nation for being strongly opposed to bank bailouts. One of the most compelling factors was the horrific impact past bailouts have had on other competitors in the sector. Bailouts rewarded the worst managements, the least deserving shareholders, and the most reckless creditors. (That’s not how capitalism is supposed to work).
As it turns out, the banking sector is no different than these other industries that have been bailed out. After the government’s largesse, bad companies do well — and at the expense of the well managed, responsible, non-reckless firms.
Forbe’s Bob Lenzner shows us exactly how warped the bailed out banking sector has become: Bob notes that Six giant banks made $51 billion in profits last year, while the rest of the banking industry — the other 980 banking institutions — all lost money.
That is simply astonishing.
As the table below shows, the other 980 that lost money (in the aggregate) — thats a heckuva data point.
Trading Revenue at U.S. Bank Holding Companies in 2009
All data from December 2009 FR Y-9C filings. Dollar amounts in millions.
|Total Assets, Dec. 31, 2009||Trading Revenue||Pretax Income||As a Percentage of Pretax Income|
|1||Goldman Sachs Group||$849,278||$23,234||$19,451||119.4%|
|2||Bank of America||2,224,539||12,067||4,592||262.8%|
|Top 6 Aggregate||59,572||51,248||116.2%|
|7||Bank of New York Mellon||212,336||1,032||2,626 *||39.3%|
|Trust and Custody Banks Aggregate||2,139||6,408||33.4%|
|12||PNC Financial Services Group||269,922||170||3,324||5.1%|
|14||Fifth Third Bancorp||113,380||125||767||16.3%|
|15||Sun Trust Banks||174,166||100||(2,450)||N/R|
|Banks Nos. 12 to 15 Aggregate||558||4,273||13.1%|
|Remaining 971 Bank Holding Companies Aggregate||1,399||(19,284)||N/R|
|All Bank Holding Companies (986 banks) Aggregate||64,202||31,908||201%|
* Excludes $4.8B in securities losses related to restructuring of Bank of New York Mellon’s investment securities portfolio in Q3 2009. “N/R” = Not relevant.
Table and data courtesy of Forbes.com
Six Giant Banks Made $51 Billion Last Year; The Other 980 Lost Money
Forbes, 06.03.10, 04:25 PM EDT
Very cool! Bloomberg names Bailout Nation as one of the top 50 Business books: May 28 (Bloomberg) — With so many business books spilling from the shelves, we’re often asked for a comprehensive list of recommendations. Here are 50 of our favorite titles published since Jan. 1, 2009. “Animal Spirits” by George A. Akerlof and…Read More
Today, I am in Las Vegas for the SALT II conference: I am on a panel discussion about regulation, reform and bailouts with Austan Goolsbee, Advisor to President Obama, and Bill Thomas, Vice Chairman of the Financial Crisis Inquiry Commission. Should be fun . . . be sure to stop me and say hello if…Read More
I submitted my new chapter for the paperback version of Bailout Nation (July 6, 2010). It contains a checklist to evaluate the upcoming — and as of yet, still ill defined — re-regulation of the financial sector. I tried to keep it realistic, discussing issues such as derivatives regulation, capital requirements, and leverage. However, I…Read More
My approach to everything I have written, studied and analyzed in this space is pretty straight forward: Start with the data and evidence and go forward from there. Figure out what the “Truth” is; try to get as close to the objective reality beneath the noise in order to make intelligent investing decisions for myself…Read More
Here’s my take on my favorite comment of this morning: “Coming soon from the author of Bailout Nation, a new look at the PIIGs crisis: Bailout Union: How Greek Profligacy and Easy Money Corrupted Europe and Shook the Continent’s Economy I’ll contact my publisher right away . . .
The NYT is reporting that A.I.G. has dismissed Goldman Sachs as an advisor: “A.I.G., the insurance giant that planned to retain Goldman to help reorganize its businesses, has replaced Goldman as its main corporate adviser, according to three people with knowledge of the matter, which was not intended to be public. Instead, the insurer is…Read More
I have regularly trashed Robert Rubin in this blog for quite some time. And while I further tarnish the name of Rubin in Bailout Nation — he is between Hank Paulson and Larry Summers in our blame list — I probably could have slapped him around even more had time and space pemitte.d No Matter….Read More
Wow, great new review of Bailout Nation in GQ: “If you read nothing else about money, read [this}: There has been no shortage of books to explain our recent recession, but to understand what the hell we all just lived through and how the fallout is going to affect us for a loooong time to…Read More
“I think they were wrong and I think I was wrong to take” their advice.” -President Bill Clinton, April 18, 2010 on on ABC’s “This Week.” > In Bailout Nation, I held Bill Clinton, and his two Treasury Secretaries, Robert Rubin and Larry Summers, responsible for signing the ruinous Commodity Futures Modernization Act that exempt…Read More