GE's quarterly profit hints at stability-as it's third quarter numbers exceeded Wall Street's expectations showing signs that orders for business may be improving. Jeffrey R. Immelt, GE's chief executive describes the company's performance as "solid" in a "global economic environment that is beginning to slowly recover." http://www.nytimes.com/2009/10/17/business/17electric.html?hp
Goldman Sach's bonus pushes the company into a public relations bind-Goldman and its employees are enjoying one of the most fruitful period in the bank's 140 year history. Goldman executives are disturbed by the resentment directed at their bank and believe this criticism is unjustified. The company finds itself having to defend their blowout profits (3.19B in the third quarter); even though, they paid back billions of taxpayers dollars. The company's top producers are expecting multi-million-dollar payouts. Goldman has set aside nearly half of its revenue to reward employees, a common practice on Wall Street, especially after such a successful quarter. Afterall, Goldman has a duty to it's employees to retain staff. In addition, Goldman Sachs may up it's charity contribution from $200M to $1B to it's own educational foundation. http://www.nytimes.com/2009/10/16/business/16bonus.html?ref=business
And from Washington, DC-Bill Shields Most Banks from Review--Bowing to political pressure from community bankers, the House Financial Services Committee approved an exemption on Thursday for more than 98% of the nation's banks from oversight by a new agency created to protect consumers. This legislation would prevent the new consumer financial protection agency from conducting annual examinations of the lending practices at more than 8,000 of the nation's 8,200 banks. http://www.nytimes.com/2009/10/16/business/16regulate.html?ref=business
Bank of America's Kenneth D. Lewis agreed on Thursday to forgo his salary and bonus as chief executive, as questions emerged about the takeover of Merrill Lynch, which may have led to his downfall. Remember, Mr. Lewis abruptly announced his resignation about two weeks ago. However, Mr. Lewis, who plans to retire on December 31, 2009, still stands to collect $53.2M pension. http://www.nytimes.com/2009/10/16/business/16lewis.html?ref=business
Meanwhile, Bank of America-the nation's largest bank-is hit by bad loans and lost $2.2B in the third quarter.
Not so good news for Citigroup-their profits the third quarter slipped to a loss of $3.2B citing spiraling consumer losses. Citigroup is one-third owned by taxpayers, with no voting power. http://www.nytimes.com/2009/10/16/business/16citi.html?ref=business
This is something to think about----- The nation's largest banks may have been preserved from failure by federal aid and are racking up vast profits even though the economy struggles to advance. The results have undercut conventional wisdom that the prosperity of banks depends on the prosperity of the customers. Generally, bank profits lag behind economic recoveries as banks wait for people and businesses to start borrowing again. But the federal government has reversed that relationship by investing more than $1 TRILLION in its efforts to prop up financial institutions.
And banks (especially Goldman Sachs, since there is no Lehman Brothers and Bear Stearns left) are benefiting from a ‘survivor effect.' There are fewer companies left on Wall Street; hence, there is less competition. Now, they can return to their high-risk practices again. http://www.washingtonpost.com/wp-dyn/content/article/2009/10/15/AR2009101504007.html
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