Earnings season is upon us, and no sector will be more closely watched by economists than the banking sector. Fresh from reports that the large banks are not cooperating with the Treasury Department on a floundering little known program to assist unemployed homeowners and underwater homeowners, the large banks reported earnings that exceeded economic forecasts.
JP Morgan came in with EPS of $1.31 on $26.7b in revenues; impressively above the estimates of EPS $1.18 and revenues of $24.6b. Under the headline were murky details like credit cards swinging from a loss to a gain largely as a result of the release of $2billion in loan loss reserves.
Wells Fargo delivered earnings of $0.75 on $21.6b in revenues, handily ahead of estimates of $0.73 and $20.4b, respectively.
With similar failures–due in large part to banking push-back–of the HAMP and HARP programs to assist struggling homeowners modify and refinance their mortgages following the fraudulent run-up in home values due in part to large financial institutions like Wells Fargo and JP Morgan Chase, it is reassuring to know that the behemoths’ bottom lines are sound.
I have long since thrown in the towel on any hopes that the current administration will force the large banks to adhere to the terms if the various governmental programs set-up to offer real help to struggling homeowners. However, it is important that we not allow these large financial institutions to return to staggering profitability without calling attention to it.