Federal Reserve - Profits and Balance Sheet Developments

[Chris Coles]

This is the first page from a 41 page report as a PDF just issued by the Federal Reserve. Fig 1. is a real eye opener.
http://www.federalreserve.gov/pubs/b...kprofits09.pdf

Morten L. Bech and Tara Rice, of the Board’s Division of Monetary Affairs, prepared this article. Thomas C. Allard and Mary E. Muething assisted in developing the database underlying much of the analysis. Zénide Avellaneda and Robert Kurtzman provided research assistance.

The continued fallout from the ongoing financial turmoil and the economic downturn weighed heavily on the performance of the U.S. commercial banking industry in 2008.

1 As house prices continued to decline, the performance of mortgage-related assets deteriorated further, and, with the onset of recession, credit problems spread to other asset classes and to a wider range of financial institutions. Delinquent loans (those whose payments are 30 days or more past due) on banks’ books continued to mount in all major loan categories, particularly among residential mortgages and construction and land development loans related to residential projects. Sizable losses and write- downs deepened concerns about the condition of some very large financial institutions, including some of their large commercial bank subsidiaries. When the financial strains intensified in the second half of 2008, the ensuing turmoil in global credit markets contributed to a steep decline in economic activity late in the year. At the same time, interest rate spreads on a wide range of private debt instruments widened further, and the functioning of many credit markets was, at times, significantly impaired. Credit default swap (CDS) premiums for banking organizations, which reflect investors’ assessments of the likelihood of a default, shot up.

2 The stock prices of bank holding companies (BHCs) fell steeply for the year, underperforming the overall market by a wide margin. Against this backdrop, the net income of the commercial banking industry contracted substantially in 2008, and the industry return on equity for the full year fell to less than 1 percent (figure 1). Industry .....

[Starving Steve]

Re: Federal Reserve - Profits and Balance Sheet Developments

This is the first page from a 41 page report as a PDF just issued by the Federal Reserve. Fig 1. is a real eye opener.

http://www.federalreserve.gov/pubs/b...kprofits09.pdf

Morten L. Bech and Tara Rice, of the Board’s Division of Monetary Affairs, prepared this article. Thomas C. Allard and Mary E. Muething assisted in developing the database underlying much of the analysis. Zénide Avellaneda and Robert Kurtzman provided research assistance.

The continued fallout from the ongoing financial turmoil and the economic downturn weighed heavily on the performance of the U.S. commercial banking industry in 2008.

1 As house prices continued to decline, the performance of mortgage-related assets deteriorated further, and, with the onset of recession, credit problems spread to other asset classes and to a wider range of financial institutions. Delinquent loans (those whose payments are 30 days or more past due) on banks’ books continued to mount in all major loan categories, particularly among residential mortgages and construction and land development loans related to residential projects. Sizable losses and write- downs deepened concerns about the condition of some very large financial institutions, including some of their large commercial bank subsidiaries. When the financial strains intensified in the second half of 2008, the ensuing turmoil in global credit markets contributed to a steep decline in economic activity late in the year. At the same time, interest rate spreads on a wide range of private debt instruments widened further, and the functioning of many credit markets was, at times, significantly impaired. Credit default swap (CDS) premiums for banking organizations, which reflect investors’ assessments of the likelihood of a default, shot up.

2 The stock prices of bank holding companies (BHCs) fell steeply for the year, underperforming the overall market by a wide margin. Against this backdrop, the net income of the commercial banking industry contracted substantially in 2008, and the industry return on equity for the full year fell to less than 1 percent (figure 1). Industry .....

Why is it that central bankers like Bernanke seem to be only concerned about the health and welfare of big banks, not the people, not the labourer? The whole system seems to stink to high-heavens. And then when Bernanke bails-out the big banks, he rewards the bank managers with outrageous salaries --- like $150 million dollars per year.

I don't like what I see at all about capitalism. It stinks to high-heavens.

Why don't the Republicans and the Tories in Britain and Canada get it? Their system of capitalism is beyond terrible.

[Diarmuid]

Re: Federal Reserve - Profits and Balance Sheet Developments

Why don't the Republicans and the Tories in Britain and Canada get it? Their system of capitalism is beyond terrible.

The system today is not Capitalism - capitalism is supposed to be about "equal opportunity" but equal opportunity on a level playing field, not equal opportunity where one side is playing towards the goal where the field is inclined at 45 degrees. I suppose they can justify the slope as there are so fewer "players" on their team.

[WildspitzE]

Re: Federal Reserve - Profits and Balance Sheet Developments

Why is it that central bankers like Bernanke seem to be only concerned about the health and welfare of big banks, not the people, not the labourer? The whole system seems to stink to high-heavens. And then when Bernanke bails-out the big banks, he rewards the bank managers with outrageous salaries --- like $150 million dollars per year.

I don't like what I see at all about capitalism. It stinks to high-heavens.

Why don't the Republicans and the Tories in Britain and Canada get it? Their system of capitalism is beyond terrible.

Oh sheesh, not this clueless understanding of what Capitalism is again. Capitalism in the US died in 1913 (Fed & 16th Amendment). Read about Fascism and Corporatism. What you're seeing now is not the death pangs of capitalism, but of the parasites that have been feeding off capitalism's carcass.

If you believe that the Fed is here to look out for the interests of the average citizen or even inflation, you haven't been paying attention. The number one mandate of the Fed is to protect the large banks and the status quo. The banks are insiders. Inflation, etc are rouses used to justify their existence.

[Chris Coles]

Re: Federal Reserve - Profits and Balance Sheet Developments

I am already on record as stating that we are not living, working and developing new businesses in a capitalist economy, but instead a Feudal Mercantile economy.

[cmalbatros]

Re: Federal Reserve - Profits and Balance Sheet Developments

No, we are in fact living in an Oligarchy , with a few people at the very top pulling the strings of those below. Its the governments job to look after the interests of those at the top.

[Slimprofits]

Re: Federal Reserve - Profits and Balance Sheet Developments

Thanks Chris Coles.

Bank profitability was already falling off of a cliff in 2006. I wonder how this breaks down across the banking spectrum. How heavily are the losses concentrated in the Too Big Too Fail (TBTT)?

[bnick20]

Re: Federal Reserve - Profits and Balance Sheet Developments

Why is it that central bankers like Bernanke seem to be only concerned about the health and welfare of big banks, not the people, not the labourer? The whole system seems to stink to high-heavens. And then when Bernanke bails-out the big banks, he rewards the bank managers with outrageous salaries --- like $150 million dollars per year.

I don't like what I see at all about capitalism. It stinks to high-heavens.

Why don't the Republicans and the Tories in Britain and Canada get it? Their system of capitalism is beyond terrible.

That's not capitalism, it's corporatism.