American Banks Are Hugely Profitable

Moneybox
A blog about business and economics.
July 16 2013 9:48 AM

Despite Whining About Regulations, American Banks Are Making Enormous Profits

160776986
WASHINGTON, DC - FEBRUARY 05: Chairman and CEO of Goldman Sachs Group Lloyd Blankfein speaks during a TV interview after a meeting with U.S. President Barack Obama February 5, 2013 in Washington, DC.

Photo by Alex Wong/Getty Images

Today Goldman Sachs reported net earnings of $1.93 billion in the second quarter. Back on Friday, J.P. Morgan said its earnings soared 31 percent to $6.5 billion and Wells Fargo reported a 19 percent increase in earnings

And good for them. The only thing worse than giant banks posting giant profits is giant banks posting giant losses and provoking a system-wide panic. But this tells you a lot about how seriously you should take the past year and a half's worth of nonstop whining about overweening Dodd-Frank regulations—i.e., not seriously at all. It also tells you a lot about how seriously you should take bank whining about the idea of tougher capital requirements. It's true that if you ordered Goldman Sachs to drastically reduce its leverage overnight you'd have some serious disruptions. But banks that are earning billions in quarterly profits can raise additional capital in a gradual manner quite easily—just use the profits rather than kicking the money out to shareholders and executives.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

  Slate Plus
Working
Dec. 18 2014 4:49 PM Slate’s Working Podcast: Episode 17 Transcript Read what David Plotz asked a middle school principal about his workday.