The 35 Financial New York Corps generated Total Pretax Income in 2011 of $85.0 bil, down 14% from 2010, but up an incredible 121% over 2009.
The $13.6 bil decline in Pretax Profit of these Financial Corps in 2011 as compared with 2010 was caused by profit declines of two large investment banking firms: Merrill Lynch of $8.6 bil and Goldman Sachs of $6.7 bil.
The $46.6 bil increase in Pretax Profit of these Financial Firms in 2011 as compared with 2009 was caused mainly by huge profit increases by three large financial firms: Citigroup of $24.8 bil, AIG of $15.0 bil, and JPMorgan Chase of $10.6 bil.
The 60 Non-Financial New York Corps generated Total Pretax Income in 2011 of a massive $133.3 bil, up 11% from 2010, and up a more robust 30% over 2009.
New York citizens should be extremely proud of the operating performance in the most recent two years of the overwhelming majority of their fine New York Corporations.
Clearly, the Obama Administration has created an economic environment that has permitted these New York Corporations to flat-out flourish.
I think the only way to ensure that these fine Non-Financial New York Corps will be able to generate Total Pretax Earnings growth for the remainder of 2012 of at least 10%, and at the same time, also result in very robust US job creation, is for the US Congress to immediately pass the following economic initiatives:
- Extend the 100% first-year tax expensing of equipment and computer software investments made in the remainder of 2012. The CBO-scored cost should not be very significant.
- Substantially accelerate first-year tax depreciation on all new building and building remodeling investments made in the remainder of 2012, and rein in its CBO-scored cost, by lowering tax depreciation in years 2 through 10.
- Pass the Research and Experimentation Tax Credit for businesses for all 2012 expenditures, but substantially enhance it, especially for smaller businesses, and simplify it.
- Give small businesses, creating US jobs in 2012, a 10% tax credit.
- Give businesses a 20% income tax credit for the expenses of moving operations from overseas back to the US. And pay for this by removing income tax deductions businesses now get for moving their production from the US to overseas. This one's pretty cool, where the pay-for is also positive to the US job count.
- Permit US taxpayers, who have their mortgage loans financed by either Fannie Mae or Freddie Mac, to have their mortgages refinanced at the current lower prevailing market interest rates.
- Pass the substantial amount of school construction infrastructure fix ups for K-12 Schools and for Community Colleges, which is in the American Jobs Act (AJA). And all of these school investments should occur in 2012, and mostly from now through the end of the summer of 2012.
The above first two will result in explosive US economic stimulation, particularly when viewed in light of future business income tax reform, which should result in a much lower business income tax rate in 2013 and going forward.
Thus, businesses will get both the 100% first-year tax depreciation on equipment purchases and the substantially accelerated first-year tax deprecation on building investments in 2012 at a business income tax rate reduction which is much higher in 2012, and then the future earnings from these equipment and building investments will generate post 2012 earnings streams from these investments which are taxed at a much lower post tax reform business income tax rate. Wow, now that is bold economic stimulation.
This above bold economic stimulation effectively works like a back-door, stealth investment tax credit in 2012, due to the expected future reduction in business income tax rates starting in 2013 under any reasonable business tax reform.
The investment tax credit was used first by President Jack Kennedy in the early 1960s to get the US out of a deep recession. And President Lyndon Johnson also used it after he took over. The end result was US real GDP growth which averaged 4.85% from 1960 to 1968. And the US unemployment rate dropped substantially while this investment tax credit was in effect during the 1960s.
This kind of very robust US real GDP growth, markedly north of 4%, and for an extended period of time, is precisely what the US economy now needs. And this very strong GDP growth is by far the best way to substantially reduce the massive US Deficit.
But these explosive economic benefits to US businesses from this accelerated first-year tax depreciation does not necessarily mean that there will be resultant substantial US job creation from it.
Thus, I would make sure that the largest of the US Corps…..say the top 50 or so…..would get these first-year accelerated tax depreciation benefits in 2012 only if they add a sufficient number of US full-time workers in 2012.
And similar economic benefits will result from the Research and Experimentation Expenditures. Not only will businesses get higher Research Tax Credits in 2012 for making investments in 2012, but they will also get 2012 tax deductions from these Research investments made in 2012 at the higher business income tax rate in 2012, and then subsequently get the future earnings stream from these Research investments taxed at the lower post tax reform business income tax rate that will be applicable starting in 2013 and going forward.
Below here is the Pretax Income (PTI) and Pretax Loss (PTL) of these 95 New York Corps for each of the most recent three years, with the most recent fiscal year ends ranging from March 2011 to February 2012.
| Obama | |||||
| Bump | |||||
| PTI(L) | PTI(L) | ||||
| 1 Year | 2 Year | ||||
| PTI(L) | PTI(L) | PTI(L) | % | % | |
| 2011 | 2010 | 2009 | Change | Change | |
| mils $s | mils $s | mils $s | |||
| New York | |||||
| Financial | |||||
| JPMorgan Chase | 26,749 | 24,859 | 16,067 | 8% | 66% |
| Citigroup | 14,624 | 13,184 | (10,199) | 11% | 243% |
| American Express | 6,956 | 5,964 | 2,841 | 17% | 145% |
| Goldman Sachs | 6,169 | 12,892 | 19,829 | -52% | -69% |
| Morgan Stanley | 6,114 | 6,231 | 1,130 | -2% | 441% |
| MetLife | 5,202 | 4,177 | 505 | 25% | 930% |
| Bank NY Mellon | 3,617 | 3,694 | (2,208) | -2% | 264% |
| MasterCard | 3,516 | 2,757 | 2,218 | 28% | 59% |
| BlackRock | 3,135 | 3,021 | 1,272 | 4% | 146% |
| AIG | 1,917 | 273 | (13,036) | 602% | 115% |
| Marsh & McLennan | 1,404 | 1,169 | 1,109 | 20% | 27% |
| Travelers | 1,352 | 4,306 | 4,711 | -69% | -71% |
| M&T Bank | 1,225 | 1,093 | 519 | 12% | 136% |
| Assured Guaranty | 1,034 | 549 | 117 | 88% | 784% |
| Moodys | 840 | 714 | 646 | 18% | 30% |
| NY Community Bancorp | 735 | 837 | 453 | -12% | 62% |
| NYSE Euronext | 725 | 686 | 205 | 6% | 254% |
| Assurant | 715 | 912 | 793 | -22% | -10% |
| HSBC USA | 682 | 1,445 | (265) | -53% | 357% |
| Nasdaq OMX Group | 573 | 526 | 391 | 9% | 47% |
| MBIA | 573 | 674 | (267) | -15% | 315% |
| Arch Capital Group | 427 | 850 | 898 | -50% | -52% |
| Jefferies Group | 419 | 397 | 508 | 6% | -18% |
| Broadridge Fincl Solutions | 270 | 342 | 346 | -21% | -22% |
| Signature Bank | 267 | 176 | 104 | 52% | 157% |
| First Niagara | 262 | 212 | 120 | 24% | 118% |
| Lazard Ltd | 235 | 244 | (182) | -4% | 229% |
| Amtrust Fincl Services | 229 | 171 | 132 | 34% | 73% |
| Alleghany | 191 | 277 | 395 | -31% | -52% |
| ETrade Fincl | 185 | (3) | (816) | 6267% | 123% |
| XL Group | 8 | 685 | 135 | -99% | -94% |
| Transatlantic | (215) | 473 | 596 | -145% | -136% |
| Platinum Underwriters | (227) | 259 | 388 | -188% | -159% |
| Everest Re Group | (234) | 591 | 939 | -140% | -125% |
| Merrill Lynch | (4,694) | 3,923 | 7,989 | -220% | -159% |
| Total all 35 Financial | 84,980 | 98,560 | 38,383 | -14% | 121% |
| Non Financial | |||||
| IBM | 21,003 | 19,723 | 18,138 | 6% | 16% |
| Verizon | 16,448 | 15,739 | 14,957 | 5% | 10% |
| Pfizer | 14,438 | 13,136 | 10,780 | 10% | 34% |
| Phillip Morris Intl | 12,532 | 10,324 | 9,243 | 21% | 36% |
| PepsiCo | 8,834 | 8,232 | 8,079 | 7% | 9% |
| Bristol Myers Squibb | 6,981 | 6,071 | 5,602 | 15% | 25% |
| Time Warner | 4,366 | 3,919 | 3,237 | 11% | 35% |
| News Corp | 4,177 | 3,323 | 2,161 | 26% | 93% |
| Colgate Palmolive | 3,582 | 3,701 | 3,538 | -3% | 1% |
| Corning | 3,343 | 3,521 | 1,934 | -5% | 73% |
| Hess | 3,248 | 2,935 | 1,522 | 11% | 113% |
| Viacom | 3,245 | 2,838 | 2,417 | 14% | 34% |
| Time Warner Cable | 2,462 | 2,196 | 1,912 | 12% | 29% |
| Loews | 2,232 | 2,902 | 2,766 | -23% | -19% |
| CBS | 2,083 | 1,222 | 653 | 70% | 219% |
| Omnicom Group | 1,549 | 1,350 | 1,274 | 15% | 22% |
| McGraw-Hill | 1,347 | 1,331 | 1,182 | 1% | 14% |
| Forest Labs | 1,338 | 951 | 971 | 41% | 38% |
| L-3 Communications | 1,328 | 1,484 | 1,386 | -11% | -4% |
| Coach | 1,301 | 1,158 | 983 | 12% | 32% |
| CA | 1,209 | 1,152 | 1,049 | 5% | 15% |
| Estee Lauder | 1,026 | 688 | 343 | 49% | 199% |
| Avon Products | 1,006 | 945 | 914 | 6% | 10% |
| Bunge Ltd | 940 | 610 | 145 | 54% | 548% |
| Polo Ralph Lauren | 825 | 689 | 588 | 20% | 40% |
| Paychex | 792 | 729 | 704 | 9% | 13% |
| Leucadia National | 681 | 369 | (241) | 85% | 383% |
| Tiffany | 665 | 547 | 390 | 22% | 71% |
| Interpublic Group | 612 | 451 | 257 | 36% | 138% |
| Vornado Realty | 604 | 562 | 119 | 7% | 408% |
| Constellation Brands | 572 | 575 | 362 | -1% | 58% |
| Henry Schein | 569 | 502 | 453 | 13% | 26% |
| Starwood Hotel | 495 | 300 | 140 | 65% | 254% |
| Weight Watchers | 483 | 313 | 290 | 54% | 67% |
| Cablevision Systems | 479 | 479 | 386 | 0% | 24% |
| Xylem | 470 | 388 | 277 | 21% | 70% |
| Sirius XM Radio | 441 | 168 | (78) | 163% | 665% |
| Foot Locker | 435 | 257 | 73 | 69% | 496% |
| PVH | 432 | 217 | 212 | 99% | 104% |
| Pall Corp | 420 | 328 | 271 | 28% | 55% |
| Jarden | 419 | 250 | 314 | 68% | 33% |
| Intl Flavors & Fragrances | 374 | 360 | 277 | 4% | 35% |
| National Fuel Gas | 372 | 356 | 339 | 4% | 10% |
| MSC Industrial Direct | 349 | 241 | 202 | 45% | 73% |
| Towers Watson | 327 | 170 | 222 | 92% | 47% |
| Ascena Retail | 284 | 209 | 102 | 36% | 178% |
| Veeco Instruments | 272 | 297 | 1 | -8% | 27100% |
| MSCI | 263 | 153 | 132 | 72% | 99% |
| AMC Networks | 232 | 206 | 159 | 13% | 46% |
| Sothebys | 231 | 226 | 15 | 2% | 1440% |
| Iconix Brand Group | 213 | 163 | 117 | 31% | 82% |
| Nielsen Holdings | 206 | (6) | (16) | 3533% | 1388% |
| BP Prudhoe Bay Royalty | 201 | 184 | 158 | 9% | 27% |
| Warnaco Group | 168 | 230 | 169 | -27% | -1% |
| Atlas Air WW | 157 | 233 | 124 | -33% | 27% |
| SL Green Realty | 136 | 142 | 67 | -4% | 103% |
| Aeropostale | 113 | 387 | 383 | -71% | -70% |
| ITT | 78 | (276) | (208) | 128% | 138% |
| AOL | 42 | 339 | 460 | -88% | -91% |
| Liz Claiborne | (148) | (90) | (234) | -64% | 37% |
| Total all 60 Non Financial | 133,282 | 120,099 | 102,172 | 11% | 30% |
| Total all 95 | 218,262 | 218,659 | 140,555 | 0% | 55% |
And lastly, let me combine all Financial Corps HQed in all US States, which generated a Pretax Income or Pretax Loss of more than $1 bil each in any of the four years from 2008 to 2011.
Altogether, there were 67 of these Financial Corps.
Now let me summarize the Total Pretax Income or Total Pretax Loss in each of these years for all of these 67 Financial Corps.
2008…..Total Pretax Loss… .$242 bil
2009…..Total Pretax Loss….…$50 bil
2010…..Total Pretax Income $147 bil
2011…..Total Pretax Income $164 bil
The magnitude of this 2008 Total Pretax Loss of $242 bil clearly shows that the US was headed for a complete financial meltdown, with a resultant depression. And this $242 bil Total Loss in 2008 was understated since some of these financial institutions, including Fannie Mae, were late in recording many of their massive Credit Losses until after 2008. And on top of these massive 2008 Losses, Fannie Mae and Freddie Mac had more than $1 trillion of their debt held as Investments by Financial Institutions, Non-Financial Corporations, Mutual Funds, Pension Funds, and other Investors, and both Fannie Mae and Freddie Mac were bankrupt, and with massive future annual losses continuing ad infinitum.
But by wise actions by both the Obama Administration and the Fed, this massive Total Loss of $242 bil in 2008 was reduced to a Total Loss of $50 bil in 2009, and then reversed course, and resulted in a Total Profit of $147 bil in 2010 and a higher Total Profit of $164 bil in 2011.
It just amazes me how so many people are still enraged at the Obama Administration and the Fed for taking actions to rescue the Financial Industry.
The above numbers don’t lie. The Obama Administration and the Fed saved the country from a sure depression. And US financial institutions, investors, and all US citizens should be very thankful mainly to Barack Obama, to Tim Geithner and to Ben Bernanke for their near miraculous actions.
Below here is the Pretax Income or Pretax Loss from 2008 through 2011 for each of these 67 Financial Giant Corps.
| PTI(L) | PTI(L) | PTI(L) | PTI(L) | ||
| 2008 | 2009 | 2010 | 2011 | ||
| mils $s | mils $s | mils $s | mils $s | ||
| AIG | NY | (103,029) | (13,036) | 273 | 1,917 |
| Fannie Mae | DC | (44,570) | (73,007) | (14,100) | (16,945) |
| Freddie Mac | VA | (44,564) | (22,384) | (14,882) | (5,666) |
| Citigroup | NY | (42,413) | (10,199) | 13,184 | 14,624 |
| Merrill Lynch | NY | (42,076) | 7,989 | 3,923 | (4,694) |
| Ally Financial | MI | (7,891) | (6,909) | 1,139 | 67 |
| Hartford Financial Services | CT | (3,846) | (1,721) | 2,356 | 230 |
| HSBC Finance US | IL | (3,695) | (8,784) | (3,903) | (3,734) |
| Allstate | IL | (3,025) | 1,248 | 1,126 | 960 |
| HSBC USA | NY | (2,676) | (265) | 1,445 | 682 |
| Legg Mason | MD | (1,880) | 330 | 365 | 303 |
| Fifth Third Bancorp | OH | (1,699) | (991) | 940 | 1,831 |
| Santander Holdings US | PA | (1,634) | (1,123) | 1,019 | 1,523 |
| MBIA | NY | (1,507) | (267) | 674 | 573 |
| ETrade Financial | NY | (1,279) | (816) | (3) | 185 |
| Prudential Financial | NJ | (1,226) | 1,524 | 4,392 | 5,117 |
| First Data | GA | (1,186) | (1,506) | (1,288) | (760) |
| MGIC Investment | WI | (948) | (1,765) | (359) | (484) |
| Radian Group | PA | (674) | (242) | (1,580) | 369 |
| CIT Group | NJ | (608) | (3,411) | 779 | 325 |
| CNA Financial | IL | (562) | 540 | 1,112 | 877 |
| Ameriprise Financial | MN | (423) | 920 | 1,634 | 1,385 |
| Key Corp | OH | (381) | (2,057) | 793 | 1,345 |
| Toyota Motor Credt | CA | (380) | (1,052) | 1,679 | 3,003 |
| Huntington Bancshares | OH | (296) | (1,071) | 352 | 707 |
| Progressive | OH | (222) | 1,557 | 1,565 | 1,487 |
| Synovus Financial | GA | (181) | (1,606) | (849) | (60) |
| SLM | DE | (34) | 272 | 1,433 | 927 |
| Zions Bancorp | UT | 39 | (1,557) | (403) | 521 |
| Regions Financial | AL | 67 | (1,268) | (844) | 414 |
| Assured Guaranty | NY | 112 | 117 | 549 | 1,034 |
| Lincoln National | PA | 244 | 209 | 1,234 | 1,346 |
| Unionbancal | CA | 412 | (226) | 793 | 1,081 |
| M&T Bank | NY | 740 | 519 | 1,093 | 1,225 |
| SunTrust Banks | GA | 740 | (1,699) | 21 | 739 |
| Discover Financial Services | IL | 794 | 229 | 1,269 | 3,511 |
| T Rowe Price | MD | 796 | 689 | 1,070 | 1,251 |
| Unum Group | TN | 824 | 1,292 | 1,331 | 257 |
| Aon | IL | 879 | 949 | 1,059 | 1,384 |
| Marsh & McLennan | NY | 921 | 1,109 | 1,169 | 1,404 |
| BlackRock | NY | 1,016 | 1,272 | 3,021 | 3,135 |
| PNC Financial | PA | 1,094 | 2,149 | 4,061 | 4,069 |
| MetLife | NY | 1,149 | 505 | 4,177 | 5,202 |
| Western Union | CO | 1,239 | 1,132 | 1,145 | 1,275 |
| CME Group | IL | 1,248 | 1,438 | 1,722 | 1,937 |
| Interactive Brokers | CT | 1,250 | 538 | 337 | 741 |
| Morgan Stanley | NY | 1,254 | 1,130 | 6,231 | 6,114 |
| TD Ameritrade | NE | 1,264 | 1,059 | 912 | 1,016 |
| Northern Trust | IL | 1,276 | 1,255 | 990 | 884 |
| Capital One Financial | VA | 1,393 | 1,336 | 4,330 | 4,587 |
| ACE Ltd | PA | 1,567 | 3,077 | 3,667 | 2,091 |
| AFLAC | GA | 1,914 | 2,235 | 3,585 | 2,992 |
| Bank NY Mellon | NY | 1,946 | (2,208) | 3,694 | 3,617 |
| Charles Schwab | CA | 2,028 | 1,276 | 1,099 | 1,392 |
| BB&T | NC | 2,079 | 1,036 | 969 | 1,628 |
| MasterCard | NY | 2,100 | 2,218 | 2,757 | 3,516 |
| Franklin Resources | CA | 2,248 | 1,289 | 2,070 | 2,624 |
| Goldman Sachs | NY | 2,336 | 19,829 | 12,892 | 6,169 |
| Chubb | NJ | 2,407 | 2,962 | 2,988 | 2,199 |
| JPMorgan Chase | NY | 2,773 | 16,067 | 24,859 | 26,749 |
| Visa | CA | 2,806 | 3,527 | 4,638 | 5,656 |
| State Street Corp | MA | 2,842 | 2,525 | 2,086 | 2,536 |
| Wells Fargo | CA | 3,300 | 17,998 | 19,001 | 23,656 |
| American Express | NY | 3,581 | 2,841 | 5,964 | 6,956 |
| Travelers | MN | 3,716 | 4,711 | 4,306 | 1,352 |
| US Bancorp | MN | 4,099 | 2,632 | 4,200 | 6,629 |
| Bank of America | NC | 4,428 | (3,629) | 7,154 | 7,648 |
| GE Capital | CT | 6,157 | (2,467) | 2,225 | 7,660 |
| Total all 67 | (241,827) | (49,736) | 146,640 | 164,291 | |
| Obama/Geithner/Bernanke Bump | |||||
| ...By year | 192,091 | 196,376 | 17,651 | ||
| ...Total | 406,118 | ||||
