The Occupy Wall Street Protesters are dead on in singling out the 1% US Big Financial Corps which have Credit Card Operations. They have been bailed out by the US Government, and now their earnings are going through the roof.
Not so for their 99% customers. While the 99%ers are still suffering severely from the financial meltdown, they have been ripped off with very high interest rates charged and also exorbitant fees charged by the Big US Financial Corps with Credit Card Operations.
And the US Government continues to loan money to these Big US Financial Corps at extremely low interest rates.
It just doesn’t make any sense to the bright Occupy Wall Street Protesters.
They aren’t bailed out for their underwater mortgages, for their underwater education loans, or for their huge credit card loans. But yet the Big US Financial Corps, not only did get bailed out by the US Government, and continue to get extremely cheap financing from the US Government, but they also continue to get unreasonably high interest rate earnings from their 99% customers.....and that results in a huge, subsidized, favorable interest rate spread.
Something is seriously wrong here and has to be corrected.
Let me first present some research on just how well the Credit Card earnings have been for these Big US Financial Corps in the most recent two years.
In my recent post on US Big Credit Corps, I focused on the four large Credit Card Corps that are independent publicly-owned corporations: American Express, Visa, Discover Financial Services, and MasterCard. And since Capital One Financial generated 66% of its Total Revenues and 75% of its Total Profits in annual 2010 in its Credit Card Segment, I also included it with the other four.
Now in this post, I am adding to these above five US Big Credit Corps, the Credit Card Segment of three gigantic US Financial Corps, which have substantial Credit Card operations. These three Corps are Bank of America, JPMorgan Chase, and Citigroup.
From their SEC filings, below here are the Pretax Income (PTI) for the first nine months of 2011, along with the previous year’s amounts, for all eight of these large US Financial Corps, including the PTI of only the Card Segment of these latter three huge US Financial Corps.
...............................................Pretax Income......
...........................................Nine Months Sept........Increase...
..............................................2011........2010......Amount....%
...............................................(millions of dollars)
Predominately Credit Card Corps
American Express.................5,208.......4,487..........721....16%
Visa......................................4,274.......3,430..........844....25%
Capital One Financial.............4,016.......3,297..........719....22%
MasterCard...........................2,758.......2,175..........583....27%
Discover Financial Services..2,694..........684........2,010..294%
Total of all 5........................18,950....14,073........4,877....35%
Card Segments of Huge Corps
Bank of America(1)...............7,519.......3,373.......4,146...123%
JP Morgan Chase..................5,746.......2,228.......3,518...158%
Citigroup(2).........................2,810..........935.......1,875...201%
Total of all 3.......................16,075.......6,536.......9,539...146%
Total of all 8.......................35,025....20,609......14,416....70%
(1) Bank of America 2010 PTI excludes $10.4 bil Goodwill Impairment Charge. If it were included, the above total % earnings increase would increase from 70% to 243%.
(2) Citigroup includes its Card operations with its Regional Consumer Banking Segment. The above earnings amounts are its after tax Net Income of its Card Operations, since it didn’t disclose its Pretax Income for its Card Operations.
Yeah, that’s correct, these 8 large US Financial Corps, generated $35.0 bil of Pretax Income from their Card Card Operations in the first 9 months of 2011, which was an increase of an incredible 70% over the prior year’s first 9 months amounts. And the real % earnings increase is even larger than 70%, because Citigroup only disclosed its after tax Net Income, which increased by 201% over the prior year.
And below here are the Pretax Income (PTI) or Pretax Loss (PTL) for annual 2010, along with the previous year 2009 amounts, for all eight of these large US Financial Corps, including the earnings of only the Card Segment of Bank of America, JPMorgan Chase, and Citigroup.
...............................................PTI(L)......PTI(L)......Increase....
................................................2010........2009....Amount.....%
..................................................(millions of dollars)
Predominately Credit Card Corps
American Express...................5,964.......2,841.......3,123...110%
Visa........................................4,638.......3,527.......1,111......31%
Capital One Financial..............4,330.......1,336.......2,994...224%
Master Card............................2,757.......2,218.........539......24%
Discover Financial Services....1,269..........229.......1,040...454%
Total of all 5..........................18,958.....10,151.......8,807......87%
Card Segments of Huge Corps
Bank of America(1)................6,020......(8,233)....14,253....173%
JP Morgan Chase...................3,329......(3,539)......6,868....194%
Citigroup(2)..........................1,536..........(115)......1,651..1,436%
Total of all 3........................10,885.....(11,887)...22,772....192%
Total of all 8.........................29,843......(1,736)...31,579...1,819%
(1) Bank of America 2010 PTI excludes $10.4 bil Goodwill Impairment Charge.
(2) Citigroup includes its Card operations with its Regional Consumer Banking Segment. The above earnings amounts are its after tax Net Income of its Card Operations, since it didn’t disclose its Pretax Income for its Card Operations.
Yeah, that’s correct, these 8 large US Financial Corps, generated $29.8 bil of Pretax Income in 2010 from their Credit Card Operations, which was an increase of an incredible $31.6 bil, or 1,819% over 2009.
Now let me give a longer term view of what happened with these US Big Financial Corps, with substantial Credit Card Operations, just before, during, and after the financial meltdown.
Here's the Total Pretax Income* of the Credit Card Operations of these 8 US Big Credit Card Corps for the past 5 years:
2011 Annualized**....$46.7 bil, up 56% from 2010
2010.........................$29.8 bil, up 1,819% from 2009
2009........................$(1.7) bil, down 111% from 2008
2008........................$15.2 bil, down 47% from 2007
2007........................$28.5 bil
* Citigroup amounts included are its Net Income, rather than its Pretax Income.
** Nine months ended September 2011 actual Pretax Income annualized, except for Visa, which has a September fiscal year end.
So, these US Big Financial Corps, with substantial Credit Card Operations, along with their supporters in the US Congress (all Republicans and even some Democrats), are constantly whining about how the Obama Administration and Ben Bernanke have just devastated their industry?
Give me a break! This credit card industry was hurt by the financial meltdown. The Total Credit Card Earnings of these 8 Big Financial Corps declined from $28.5 bil in 2007 down to a loss of $(1.7) bil in 2009, or down by $30.2 bil in those two years.
But in only one year since 2009, this Total Loss of $(1.7) bil turned into a massive Total Profit of $29.8 bil, which exceeded its pre-financial meltdown earnings in 2007 of $28.5 bil. And for 2011, the nine-month actual annualized would be an even more massive $46.7 bil, or up an incredible $48.4 bil in those two years.
And their 2011 total nine-month annualized earnings of $46.7 bil are even an incredible 63% higher than they were in 2007, just before the financial meltdown hit.
I suggest that the 99%ers are the ones severely damaged, and not as yet even close to being made whole, by the financial meltdown, not the US Big Financial Corps with substantial Credit Card Operations.
There is a reason the Occupying Protesters are having such a positive impact. It's calling out the economic injustices like this one, and they are expecting the US Government to function properly and correct them.
