In an editorial on February 20th, here (which has caused quite the hubbub), Bloomberg.com maintained that most big banks are not profitable because their preferred rate to borrow from the government amounts to a gift roughly equal to their stated profits:
The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits . . .. In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.
No one seems to be inquiring too deeply, however, why the banks are not profitable without continuing massive taxpayer support ($83 billion annually -- remind you of anything beginning with the letter "s" and starting today?).
Gee, could it be because of all those bad mortgages on and off the books which are not performing and cutting into their capital? Ya think?
And maybe, just maybe, the Fed's policies are trying to repair this one thing only, while telling us it's to help with employment, housing, the stock market even, blah, blah, blah, pissing down our backs and tellin' us it's rainin'?
If this were really a free market economy with a private banking industry, we'd have had the equivalent of $85 billion in sequestration spending cuts for years already by not subsidizing these losers.
And another thing we wouldn't have is these big banks. They would have failed already.
