Since there are so many Big Corps in the State of New York, and since Financial Big Corps are so substantial in New York, I'll be making two separate posts on New York Big Corps.
This first post here just deals with the New York Big Corp Financials. There are 30 of them, and I have included Merrill Lynch, even though it is now owned by North Carolina-based Bank of America. I also have included two large Partnerships.....KKR and Blackstone Group.....and one large Real Estate Investment Trust (REIT).....Annaly Capital Management. I have excluded Travelers Insurance Corp because it has an SEC Location Code in Minnesota.
The Total Core Pretax Earnings of these 30 Big New York Financial Corps skyrocketed in 2010 to $101.1 bil, an increase of a massive $67.5 bil, or up 201%, from 2009.
Below here are the individual current earnings for these New York 30 largest publicly-held Financial Corps, as was disclosed in either their most recent annual Fiscal Year Ended (FYE) 2010 earnings releases or in their most recent SEC annual report filings.
New York's 30 Largest Publicly-Held Financial Corps Most Recent Annual Pretax Earnings (PTI)
................................................................................Increase...
......................................FYE......PTI(L)....PTI(L)....(Decrease)....
New York Financial.......2010.....2010......2009.....Amount....%.
..................................................(millions of dollars)..........
Financial (30 NY Big Corps)
JP Morgan Chase(1).......Dec…..24,859...16,067.......8,792....55%
Citigroup(2)...................Dec…..13,184..(10,199)....23,383..229%
Goldman Sachs..............Dec…..12,892....19,829.....(6,937)..(35)%
KKR LP(3)......................Dec…...7,852......6,889.........963.....14%
Morgan Stanley..............Dec…...6,202........983.......5,219...531%
American Express..........Dec…...5,964......2,841......3,123...110%
MetLife..........................Dec…...3,958.....(4,334).....8,292...191%
Merrill Lynch(4)............Dec…...3,923......7,989....(4,066)...(51)%
Bank of NY Mellon.........Dec…...3,694.....(2,208).....5,902...267%
BlackRock......................Dec…...3,021......1,272......1,749...138%
Loews(5)........................Dec…..2,902......2,766.........136.......5%
Mastercard....................Dec…...2,757......2,218........539.....24%
Annaly Capital Mgt(6)....Jun…...1,300......1,996......(696)...(35)%
M & T Bank.....................Dec…...1,093........519........574.....111%
Assurant(7)...................Dec….....960.........793........167......21%
Arch Capital Group, Ltd.Dec….....850.........898........(48).....(5)%
NY Community Banc(8).Dec….....837.........453........384.....85%
Marsh & McLennan........Dec….....769.........552........217.....39%
CIT Group(9).................Dec….....768......(3,411)...4,179....123%
Moodys.........................Dec….....714.........646..........68......11%
NYSE Euronext..............Dec….....686.........265........421....159%
XL Capital Group plc......Dec….....685.........135........550....407%
Nasdaq OMX Group........Dec….....526.........391........135......35%
Transatlantic Holdings...Dec….....473.........596.......(123)....(21)%
Jefferies Group(10)........Nov…....397.........508.......(111)....(22)%
Broadridge Fincl Sols.....Jun….....342.........346...........(4).....(1)%
AIG(11)..........................Dec….....169....(13,036)..13,205....101%
E*Trade Financial(12)....Dec…........(3).......(816)........813....100%
MBIA(13).......................Dec…....(156)........948....(1,104)..(116)%
Blackstone Group(14).....Dec…...(523)....(2,291)....1,768.....77%
Total NY 30 Fincl Big Corps...101,095...33,605..67,490.. 201%
(1) JP Morgan Chase 2010 PTI above includes a $7.4 bil Litigation Charge. If this were excluded, JP Morgan Chase's 2010 PTI would be $32.3 bil, an increase of 101% over 2009.
(2) Citigroup 2009 PTL excludes a huge Gain on sale of Smith Barney and establishment of joint venture with Morgan Stanley. It also excludes a huge Loss related to TARP repayment debt extinguishment. In addition, it excludes a Gain on public and private exchange offers.
(3) KKR is a partnership.
(4) Merrill Lynch is now owned by North Carolina-based Bank of America. Merrill still files its separate results with the SEC.
(5) Loews 2009 PTI excludes large Asset Impairment Charge.
(6) Annaly Capital Management is organized as a Real Estate Investment Trust(REIT).
(7) Assurant PTI in both years exlude Intangible Asset Impairment Charges.
(8) New York Community Bancorp 2009 PTI excludes Gain on business acquisition.
(9) CIT Group 2009 PTL excludes Intangible Asset Impairment Charge.
(10) Jefferies Group 2010 PTI is only for 11 months ended November.
(11) AIG 2010 PTI excludes huge Gain on Sale of Business. Its 2009 PTL excludes Loss on Sale of Business.
(12) E*Trade Financial 2009 PTI excludes Loss on Debt Extinguishment.
(13) MBIA PTI and PTL in both years exclude Gain of Debt Extinguishment.
(14) Blackstone Group operates as a Partnership.
And below here is the Core Pretax Income(Loss) for each of these New York Big Financial Corps for each of the most recent 5 years. These below Core Pretax Income numbers exclude large Asset Impairment Charges, large Debt Extinguishment Gains and Losses, and also unusually large Gains and Charges.
.................................................Pretax Income(Loss)..................
................................2010.......2009.......2008.......2007.....2006
.............................(all amounts are in millions of dollars)
NY Financial (30 Big Corps)
JP Morgan Chase..24,859.....16,067.......2,773....22,805...19,886
Citigroup(A).........13,184.....(10,199)...(42,413).......776..28,489
Goldman Sachs.....12,892......19,829.......2,336....17,604...14,560
KKR LP...................7,852.......6,889....(13,048).....2,413.....4,144
Morgan Stanley......6,202..........983.......1,254.......3,394.....9,064
American Express..5,964.......2,841........3,581......5,694.....5,152
MetLife..................3,958......(4,334).......5,059......5,762....3,926
Merrill Lynch........3,923.......7,989....(42,076)..(12,831)...9,810
Bank of NY Mellon.3,694......(2,208).......1,946......3,225.....2,170
BlackRock..............3,021.......1,272........1,016......1,823........528
Loews(B)................2,902.......2,766.......1,760......3,195.....3,104
Mastercard(C)........2,757.......2,218.......2,100......1,671........709
Annaly Capital Mgt.1,300.......1,996.........372.........424........102
M & T Bank..............1,093.........519..........740.........964.....1,232
Assurant...................960.........793..........563.......1,011.....1,096
Arch Capital Grp, Ltd.850.........898..........305.........874........740
NY Community Banc.837.........453............54.........402........349
Marsh & McLennan...769.........552..........494..........847........912
CIT Group(D)............768.....(3,411)........(608)......1,409.....1,208
Moodys(E)................714.........646..........730.......1,117.....1,100
NYSE Euronext(F).....686.........265..........945.........892........329
XL Capital Grp plc(G).685.........135..........117.......1,594......1,896
Nasdaq OMX Grp(H)..526.........391..........513..........363........213
Transatlantic Hldgs...473.........596.............3..........596........540
Jefferies Group..........397.........508........(888)........246........349
Broadridge Fincl Sols.342.........346..........320.........321........303
AIG...........................169...(13,036)..(103,029)...8,943....21,687
E*Trade Financial........(3).......(816).....(1,279)....(2,175).......932
MBIA(I)...................(156).........948.....(4,137)....(3,066).....1,133
Blackstone Group.....(523).....(2,291)...(5,608).....5,708.....8,154
Total 30 Financial NY
....Big Corps.......101,095 ..33,605..(186,105)..76,001..143,817
The above PTI(L)amounts for 2006 through 2008 exclude the following:
(A) Citigroup...2008 Intangible Asset Impairment Charg
(B) Loews...2008 Asset Impairment Charge.
(C) Mastercard...2008 huge Litigation Charge and 2006 large Charitable Contribution to Mastercard Foundation.
(D) CIT Group...2008 Intangible Asset Impairment Charge.
(E) Moodys...2006 Gain on Building Sale.
(F) NYSE Euronext...2008 huge Intangible Asset Impairment Charge.
(G) XL Capital Group, plc...2008 large Goodwill Impairment Charge.
(H) Nasdaq OMX Group...2007 Gain on Sale.
(I) MBIA...2008 Gain on Debt Extinguishment.
As you can see from the above 5 year Earnings Chart, New York Big Financial Corps Total Core Pretax Earnings peaked in 2006 at $143.8 bil. Thus, 2010 Earnings of $101.1 bil are 30% below these peak 2006 earnings.
The main reasons for this 30% drop off from 2006 earnings are AIG and Citigroup. And nearly the entire $43.7 bil drop off in Earnings can be accounted for by 3 Big Corps: AIG, Citigroup and Merrill Lynch.
As you can see in the Total columns of the above 5 Year Earnings Chart, here is the five-year Total Annual Core Pretax Income, as well as the Annual Percentage Change from the immediately preceding year, for these 30 New York Big Financial Corps, split in halves for further analysis.
..2006 Pretax Income..$143.8 bil
..2007 Pretax Income...$76.0 bil..down $67.8 bil, or 47%
..2008 Pretax Loss.....$(186.1)bil..down $262.1 bil, or 345%
I have always been very skeptical when some pundits claim that the US was headed for a Depression after the Financial Meltdown in 2008. But I have never seen the precise salient numbers before.
When the 30 Big Financial Corps in the country's financial capital, New York City, that dominate the country's financial landscape, registered a Total Core Pretax Loss of $186 bil in 2008, down $262 bil from 2007, on the back of a $68 bil earnings decline in 2007 over 2006, then I think it is very safe to assert that yes, the US was clearly very likely headed for a Depression. And I haven't included in the above numbers, Lehman Brothers Losses, nor the gigantic losses of Fannie Mae and Freddie Mac in 2008.
So, let's see what happened to the Total Profits of these 30 New York Financial Big Corps subsequent to what seemed to be a future very likely Depression:
..2008 Pretax Loss...$(186.1)bil...
..2009 Pretax Income...$33.6 bil...up $219.7 bil, or 119%
..2010 Pretax Income..$101.1 bil...up $67.5 bil, or 201%
And half of the country still thinks that the Obama Administration hasn't helped the US economy!
And many of the Big Financial Corps are still very disappointed with how the Obama Administration has handled the financial crisis!
I say all of these people should get in the real world, and just think about the incredible financial turnaround as shown in the above earnings numbers of these huge New York Financial Corps.
What happened here in the US Financial Sector was a near miracle, just like the near miracle that was shown in an earlier post of what happened with the amazing 2010 turnaround earnings numbers in Michigan's Auto and Auto-related Industry, and also just like the near miracle that was shown in an earlier post of what happened with the incredible, whole-scale 2010 blow-out earnings of nearly all Technology Big Corps in California's Silicon Valley.
Because what happened recently with the New York Big Financial Corps seemed so incredibly positive, I decided to expand my research to focus on all of the Big Financial Corps that are based outside of New York.
Thus, I decided to research and summarize below the Big Financial Corps based outside of New York, ones that have close to $1 bil or more in either Core Pretax Income or Core Pretax Losses in any of the most recent 5 years. Later, I'll do some further research to see if I missed any of these financial companies in this research.
I came up with 55 Big Financial Corps based outside of New York. GE Capital Corp is included since it files separate financial statements with the SEC, even though it is owned by GE. Fannie Mae and Freddie Mac are also included.
Frankly, I was surprised when I discovered the magnitude of the turnaround in the 30 New York Big Financial Corps, whose Total Core Pretax Earnings skyrocketed in 2010 to $101.1 bil, an increase of a massive $67.5 bil, or up 201%, from 2009.
But this was nothing when compared with what happened in 2010 to the Financial Big Corps based outside of New York.
As you can see below, the Total Core Pretax Earnings of the 55 Big Financial Corps outside of New York was $108.6 bil in 2010, as compared with a Pretax Loss in 2009 of $21.8 bil, thus a massive $130.4 bil of profit uptick.
And then when I combine the 30 Financial New York Big Corps with the 55 Financial Big Corps outside of New York, the results are off-the-charts. Core Pretax Income of these 85 Financial Big Corps, located all across the country, reached $209.7 bil in 2010, an increase of an incredible 1,675% from the $11.8 bil earned in 2009. Whoa! And half of the country thinks that the Obama Administration hasn't helped the US Economy! Anyone with only a dose of financial savvy knows that this isn't even close to the case. The country should be very thankful for what the Obama Administration's Economic Team accomplished here.
Below here are the individual current earnings for these 55 largest publicly-held Financial Corps based outside of New York, as was disclosed in either their most recent annual Fiscal Year Ended (FYE) 2010 earnings releases or in their most recent SEC annual report filings.
55 Largest Publicly-Held Financial Corps Based outside of New York Most Recent Annual Pretax Earnings (PTI)
..............................................................................Increase...
...............................................PTI(L).....PTI(L)....(Decrease)....
Non-NY Financial.......State.....2010.......2009.....Amount....%.
..................................................(millions of dollars)..........
Financial Big Corps Outside of NY
Berkshire Hathaway.....NE......19,051....11,552......7,499.....65%
Wells Fargo..................CA......19,001....17,998.....1,003........6%
Bank of America(1).......NC......11,077.....4,360.....6,717....154%
UnitedHealth Group.....MN......7,383......5,808.....1,575......27%
Visa(2).........................CA.......4,638......3,527......1,111......31%
Prudential Financial.....NJ.......4,422......1,552......2,870....185%
WellPoint(3).................IN.......4,354......3,611.........743......21%
Capital One Financial...VA.......4,330......1,336......2,994....224%
Travelers.....................MN.......4,306.....4,711.......(405).....(9)%
US Bancorp..................MN.......4,200.....2,632.....1,568.....60%
PNC Fincl Svcs(4).........PA.......4,061......2,149......1,912.....89%
ACE, Ltd(5)..................PA.......3,667......3,077.......590.....19%
AFLAC.........................GA.......3,585......2,235.....1,350.....60%
Chubb..........................NJ.......2,988......2,962..........26........1%
Aetna...........................CT.......2,644......1,901........743......39%
Hartford Fincl Svcs(6)..CT.......2,417.....(1,728).....4,145....240%
GE Capital Corp(7).......CT.......2,349.....(2,335).....4,684....201%
State Street..................MA......2,086......2,525.......(439)..(17)%
Franklin Resources......CA.......2,070......1,289........781.....61%
Cigna…………………........PA.......1,870......1,898.........(28).....(1)%
Humana.......................KY.......1,750......1,602........148.......9%
CME Group...................IL.......1,722.......1,438........284.....20%
Ameriprise Fincl..........MN......1,594.........920........674.....73%
Progressive Corp.........OH.......1,565.......1,557...........8........1%
SLM(8)........................VA.......1,433.........272......1,161....427%
Unum Group...............TN.......1,331.......1,292...........39........3%
Discover Fincl Svcs......IL.......1,269.........229......1,040....454%
Lincoln National..........PA.......1,234.........209.....1,025....490%
Ally Financial..............MI.......1,179.....(6,959)....8,138....117%
Allstate........................IL........1,126......1,248.......(122)..(10)%
CNA Financial..............IL.......1,112.........540........572....106%
Charles Schwab(9).......CA.......1,099......1,276......(177)..(14)%
T Rowe Group.............MD.......1,070........689........381.....55%
AON.............................IL.......1,059........949........110......12%
Northern Trust.............IL.........990......1,255.......(265)..(21)%
BB&T...........................NC.........969......1,036........(67).....(6)%
Coventry Health(10)...MD.........965........505........460.....91%
Nationwide..................OH.........959........716........243.....34%
Fifth Third(11).............OH.........940.......(991)....1,931....195%
TD Ameritrade............NE.........912.......1,059......(147)..(14)%
Principal Financial......IA..........841.........746.........95......13%
Invesco, Ltd(12).........GA.........834.........358........476....133%
KeyCorp.....................OH.........793.....(2,298)....3,091....135%
WR Berkley.................CT.........603.........382.........221.....58%
Everest Re Grp(13).....NJ..........591.........939.......(348)...(37)%
Cincinnati Fincl..........OH.........501.........582.........(81)....(14)%
Interactive Brokers.....CT.........341.........544.......(203)...(37)%
Comerica....................TX.........315........(115).......430....374%
Genworth Financial....VA..........76........(792).......868....110%
SunTrust Banks(14).....GA..........21......(1,699)....1,720....101%
MGIC Investment.......WI.......(359).....(1,765)....1,406.....80%
Regions Fincl(15).......AL.......(885).....(1,789).......904......51%
Marshall & Ilsley........WI.......(899).....(1,394).......495......36%
Fannie Mae(16)..........DC...(14,100)..(73,007)..58,907....81%
Freddie Mac..............VA...(14,882)...(22,384)....7,502.....34%
Total 55 Financial Big Corps
....Outside of NY..............108,568....(21,790)..130,358..598%
Total 30 NY Financial
....Big Corps.....................101,095......33,605.....67,490..201%
All 85 US Financial
....Big Corps....................209,663......11,815....197,848..1675%
(1) Bank of America 2010 PTI excludes huge Goodwill Impairment Charge.
(2) Visa 2009 PTI excludes large Gain on Sale of Visa Brasil Investment
(3) WellPoint 2009 PTI excludes large Gain of Sale of Business.
(4) PNC Financial Services 2009 PTI excludes Gain on BlackRock Investment.
(5) Ace, Ltd is now legally in Switzerland, and before in Bermuda, but with its external CPA firm in Philly.
(6) Hartford Financial Services 2010 PTI excludes Goodwill Impairment Charge.
(7) GE Capital Corp is the Finance Subsidiary of GE. It files separate financial statements with the SEC.
(8) SLM 2010 PTI excludes Asset Impairment Charge. Both years' PTI exclude Gains on Debt Extinguishment.
(9) Charles Schwab 2010 PTI excludes large Litigation Charge.
(10) Coventry Health Care 2010 PTI excludes large Class Action Charge.
(11) Fifth Third Bancorp 2009 PTI excludes large Gain on Sale of Business.
(12) Invesco, Ltd is a Bermuda Corp, with an SEC Location Code in Georgia.
(13) Everest Re Group, Ltd is a Bermuda Corp, with an SEC mailing address in New Jersey.
(14) SunTrust Banks 2009 PTI excludes large Intangible Asset Impairment Charge.
(15) Regions Financial 2009 PTI excludes large Leverage Lease Termination Gain.
(16) Fannie Mae 2009 PTL includes an unusually large Provision for Guarantee Losses.
And below here is the Core Pretax Income(Loss) for each of these 55 Big Financial Corps outside New York for each of the most recent 5 years. These below Core Pretax Income numbers exclude large Asset Impairment Charges, large Debt Extinguishment Gains and Losses, and also unusually large Gains and Charges.
.................................................Pretax Income(Loss)..................
................................2010.......2009.......2008.......2007.....2006
.............................(all amounts are in millions of dollars)
Financial Big Corps Outside of NY
Berkshire Hathaway.19,051....11,552.....7,574....20,161....16,778
Wells Fargo..............19,001...17,998.....3,300....11,627....12,650
Bank of America......11,077.....4,360.....4,428....20,924....31,973
UnitedHealth Group..7,383.....5,808.....4,624.....7,305......6,528
Visa...........................4,638.....3,527.....2,806.....1,266.........722
Prudential Fincl.........4,422.....1,552....(1,226)....4,686......4,394
WellPoint...................4,354.....3,611.....3,122......5,258......4,914
Capital One Fincl........4,330.....1,336.....1,393.....3,870......3,672
Travelers...................4,306.....4,711.....3,716.....6,216......5,725
US Bancorp................4,200....2,632.....4,099.....6,207......6,863
PNC Fincl Svcs...........4,061.....2,149.....1,094.....2,094......1,927
ACE, Ltd....................3,667.....3,077....1,567.....3,153......2,823
AFLAC......................3,585.....2,235......1,914.....2,499......2,264
Chubb.......................2,988.....2,962.....2,407.....3,937......3,525
Aetna........................2,644.....1,901.....2,174.....2,796......2,587
Hartford Fincl Svcs...2,417....(1,728)...(3,846)...4,005......3,602
GE Capital Corp.........2,349....(2,335)....6,157...12,685....11,260
State Street...............2,086.....2,525.....2,842.....1,903......1,771
Franklin Resources...2,070.....1,289.....2,248.....2,465......1,836
Cigna.........................1,870.....1,898.......382......1,631......1,731
Humana....................1,750.....1,602.......993......1,289........762
CME Group...............1,722.....1,438.....1,248......1,096........672
Ameriprise Fincl......1,594........920......(423).....1,016.........797
Progressive Corp......1,565.....1,557......(222).....1,693......2,433
SLM..........................1,433.......272........(34)......(482)......1,995
Unum Group.............1,331.....1,292.......824........997.........465
Discover Fincl Svcs...1,269.......229.......794......1,526......1,668
Lincoln National.......1,234.......209.......244......1,874......1,778
Ally Financial...........1,179....(6,959)..(7,891)...(1,942)....2,228
Allstate.....................1,126.....1,248...(3,025)....6,653.....7,178
CNA Financial...........1,112........540......(562)....1,222......1,650
Chas Schwab.............1,099.....1,276....2,028.....1,853......1,476
T Rowe Group...........1,070.......689.......796.....1,077........858
AON..........................1,059.......949.......879.....1,010........728
Northern Trust............990.....1,255....1,276.....1,061......1,024
BB&T...........................969.....1,036....2,079.....2,570.....2,473
Coventry Health..........965.......505.......572........995.........896
Nationwide..................959.......716....(1,368)......800........799
Fifth Third...................940......(991)...(1,699)...1,537......1,627
TD Ameritrade.............912.....1,059....1,264.....1,035........857
Principal Fincl.............841.......746.......461......1,048......1,331
Invesco, Ltd................834.......358.......657.....1,244......1,034
KeyCorp......................793...(2,298).....(381)....1,221......1,643
WR Berkley..................603.......382.......326.....1,092.........989
Everest Re Grp.............591........939......(84).....1,028.........992
Cincinnati Fincl............501.......582.......540.....1,192.......1,329
Interactive Brokers......341.......544.....1,250.......932.........762
Comerica.....................315.......(115).......271.......988......1,127
Genworth Financial......76.......(792)......(655)....1,606.....1,853
SunTrust Banks.............21.....(1,699)......740.....2,250.....2,986
MGIC Investment......(359)...(1,765).....(948)...(2,235).......525
Regions Financial......(885)....(1,789).......67.....2,039......1,992
Marshall & Ilsley.......(899)....(1,394)....(967).......711.........955
Fannie Mae...........(14,100).(73,007).(44,570).(5,126)....4,213
Freddie Mac.........(14,882)..(22,384)..(44,564).(5,977)...2,282
Total 55 Fincl Big Corps
.Outside NY......108,568..(21,790).(39,309)..153,581..183,922
Total 30 Fincl NY
.Big Corps.........101,095...33,605..(186,105)...76,001..143,817
All 85 Fincl US
.Big Corps.......209,663...11,815..(225,414)..229,582..327,739
As you can see from the above 5 year Earnings Chart, Big Financial Corps based outside of New York had their Total Core Pretax Earnings peak in 2006 at $183.9 bil. Thus, 2010 Earnings of $108.6 bil are 41% below these peak 2006 earnings.
The main reasons for this 41% drop off from 2006 earnings are Bank of America, Fannie Mae, Freddie Mac, GE Capital Corp and Allstate Insurance. But even when you combine the effect of these 5 Big Financial Corps, you still have about $4 bil more earnings drop off to account for, which is spread over many of the other Financial Corps. Clearly, from a long-term 5 year perspective, the earnings of the New York Big Financial Corps have recovered much better than that of the Big Financial Corps located outside of New York.
When I review the individual financial statements of the Bank of America and of Fannie Mae, I have to just shake my head. Let me explain.
Here's Bank of America's Core Pretax Income and embedded Provision for Credit Losses for each of the past 5 years:
........Core Pretax Income...Provision for Credit Losses
..2010......$11.1 bil.....................$28.4 bil
..2009.......$4.4 bil.....................$48.6 bil
..2008.......$4.4 bil.....................$26.8 bil
..2007......$20.9 bil......................$8.4 bil
..2006......$32.0 bil......................$5.0 bil
When you think about the financial panic from the 2008 Financial Meltdown, is it really reasonable for Bank of America to have only booked $26.8 bil in Provisions for Credit Losses in 2008?
And here's Fannie Mae's Pretax Income(Loss) and embedded Provision for Loan and Guarantee Losses for each of the past 5 years:
...................................................Provision for................
........Pretax Income(Loss)...Loan and Guarantee Losses.........
..2010......$(14.1) bil.......................$24.9 bil
..2009......$(73.0) bil.....................$72.6 bil
..2008......$(44.6) bil.....................$28.0 bil
..2007.......$(5.1) bil..........................$4.6 bil
..2006.........$4.2 bil..........................$0.6 bil
When you think about the financial panic from the 2008 Financial Meltdown, is it really reasonable for Fannie Mae to have only booked $28 bil in Provisions for Loan and Guarantee Losses in 2008?
But you know, it wasn't just Wall Street and the Mega Financial Institutions causing all the Financial Meltdown. It goes back to the unbridled greed all throughout the banking system too, even in smaller cities. Let me give you an illustration.
Fifth Third Bancorp, headquartered in Cincinnati, is one of the two largest banks in the Evansville, IN Metro Area. In the early 2000s, I had $10,000 to park in my very small business. I put it in Fifth Third because they were giving the best interest rates at the time.
So what happened after a bit of time. Without any notice from Fifth Third Corp, I discovered that my $10,000 had dropped significantly when I got my annual statement of this account...they were only sending them out annually.
I couldn't believe it. Fifth Third had turned my $10,000 interest-bearing account into effectively a depreciating piece of equipment.
I called the local Fifth Third in Newburgh,IN. The answer I got was the Bank started charging fees for this account, even though it didn't notify the account holders. And these fees were substantially higher than the interest earned in the account. I quickly moved my substantially depreciated remaining Cash Balance to another bank, Old National Bank, before it was totally depreciated.
And a top executive at Fifth Third is now running for Evansville Mayor. Go figure! Good luck with your finances Evansville, if he is elected. It's what like happened in Florida, when Governor Rick Scott was recently elected, after having a checkered business career with hospital giant HCA. One of his first actions....cut State Education and other State Services, and use these savings to pay for a substantial State Corporate Income Tax Rate Reduction.
My earlier assertion, that the US was very likely headed for a Depression after the 2008 Financial Meltdown, was based on the flat out earnings meltdown in just the 30 Big Financial New York Corps in 2008. Let me now update this information to also include the 55 Big Financial Corps based outside of New York, to see if the Depression assertion still holds water.
As you can see in the Total columns of the above earlier 5 Year Earnings Chart, here is the five-year Total Annual Core Pretax Income, as well as the Annual Amount and Percentage Change from the immediately preceding year, for all of the 85 Big Financial Corps, those based both in New York and also based outside of New York And again, I'll split it up in halves to facilitate further analysis.
..2006 Pretax Income..$328 bil
..2007 Pretax Income..$230 bil..down $98 bil, or 30%
..2008 Pretax Loss.....$(225)bil..down $455 bil, or 198%
When the 85 Big Financial Corps all throughout the country, which dominate the country's financial landscape, registered a Total Core Pretax Loss of $225 bil in 2008, down an incredible $455 bil from 2007, on the back of a $98 bil earnings decline in 2007 over 2006, then I think it is even more safe to assert that yes, the US was clearly very likely headed for a Depression.
So, let's see what happened to the Total Profits of these 85 Financial Big Corps subsequent to what seemed to be an even more likely future Depression:
..2008 Pretax Loss....$(225)bil...
..2009 Pretax Income...$12 bil...up $237 bil, or 105%
..2010 Pretax Income..$210 bil...up $198 bil, or 1675%
Yeah, the Obama Administration Economic Team's wise actions, coupled with prescient actions from Fed Chairman Ben Bernanke, saved the country from what would have been a sure Depression.
