Six US Financial Corps dominate the financial scene.
Especially given the historic, highly successful Occupy Wall Street movement, bent on positively changing the US economy due to its many injustices, I think it would be helpful to see just how well these Big Six Financial Corps are doing.
Well, the Total Pretax Earnings of these Big Six Financial Corps increased by 20% in the most recent 3Q 2011, over the previous year's 3Q.
I wonder how many of the 99%ers have had their financial situation improve by at least 20% in the most recent 3Q. My hunch is that it is 1% of them, at most.
Below here is the Pretax Income in the most recent 3Q 2011 of these Big Six.
..........................................3Q............3Q..........Increase
........................................2011.........2010......(Decrease)
.......................................PTI(L).........PTI.....Amount......%
........................................(in millions of dollars)......
Bank of America (1)........7,433........4,488......2,945......66%
Wells Fargo....................6,140.........5,176........964......19%
JPMorgan Chase............5,818.........6,203.......(385)......(6)%
Citigroup.......................5,020........3,299......1,721......52%
Morgan Stanley.............3,678...........801......2,877.....359%
Goldman Sachs...............(730)........2,811.....(3,541)..(126)%
Total Big Six................27,359.....22,778......4,581......20%
(1) Bank of America 3Q 2010 PTI excludes $10.4 bil Goodwill Impairment Charge. It this were included, the Total Earnings Increase of the Big Six would be 121%, rather than the above reported 20%.
Just below the Big Six in historical profitability is GE Capital Services (GECS), which is the financial wing of GE. GECS had an exceptionally strong 3Q 2011, with Pretax Earnings of $1,548 mil, up 276% from the $412 mil earned in the 3Q 2010.
When GECS is combined with the above Big Six, the Total 3Q 2011 Pretax Earnings of the Big Seven Financial Corps increased by a very strong 25% over the 3Q 2010.
One of the major reasons for these much improved profits of the Big Six is the Gains from the substantial widening of Interest Rate Spreads. Here are the four of them that reported 3Q 2011 Gains from the widening of Interest Rate Spreads:
.....Bank of America.....$6.2 bil
.....Morgan Stanley......$3.4 bil
.....Citigroup................$1.9 bil
.....JPMorgan Chase.....$1.9 bil
.....Total Gains............$13.4 bil
The only spread widening of the 99%ers is the negative one from the increased Underwater Mortgage Spread and the increased Underwater Education Loan Spread. The related home value asset and education value asset have both dropped precipitously from this horrible US economy, where only the Big Corps and the 1% continue to sparkle financially, while the other 99% are left to rust.
The second major reason for these much improved profits of the Big Six is the substantial, very puzzling Reduction in Loan Loss Provision Charges made by the Big Four that are heavy in making Loans.
The Big Four has a Total Increase in Pretax Income of $5.2 bil in the 3Q 2011 over the previous year's quarter. How much of this $5.2 bil increase is due just to Lower Loan Loss Provision Charges made? Well, more than all of it. In fact, 34% more than all of it. The Total Reduction in the Loan Loss Provision Charges of these Big Four from the previous year's 3Q was an incredible $7.0 bil.
...................................3Q 2011............3Q 2011
..................................Loan Loss.............PTI
..................................Provision...........Increase
..................................Decrease...........(Decrease)
..............................Over 3Q 2010....From 3Q 2010
......................................(millions of dollars)
Citigroup......................2,568................1,721.........149%
Wells Fargo...................1,634..................964.........170%
JPMorgan Chase..............812.................(385)........211%
Bank of America...........1,989................2,945..........68%
Total...........................7,003................5,245.........134%
GECS's 3Q 2011 Pretax Earnings also substantially benefited from lower Loan Loss Provision Charges, which were down by $617 mil from the 3Q 2010.
So the 99%ers, including US small businesses, who the Big Four are making much of their profits from, have their financial status mostly deteriorate substantially in the past year, and the Big Four react to this by making just the opposite assessment, by reducing their Total Loan Loss Charges on their books by $7.0 bil.
Something just doesn't smell right here. The Big Four boldly and substantially reduce their Loan Loss Provisions in the current quarter from a year ago, across the board, even though they have to know that their Loan Customers, in the aggregate, are in a much worse financial situation than they were a year ago. I call that pouring salt on the wounds of their financially suffering loan customers. It's just not right.
The Occupy Wall Street Movement, and all of their 99% supporters, including many small businesses, are spot on. The deck is stacked against them, the Big Corps are continually dealing from the bottom of the deck, and the US Government, especially the US Congressional Republicans, facilitate this patently unfair process, which is destroying the fabric of the US Democracy.
