Aww, poor banks.

*rolls eyes*

For those that don't want to RTFA, let me put things in perspective:

Commercial banks and savings institutions insured by the FDIC reported net income of $105.5 billion in 2007, a decline of $39.8 billion, or 27.4% from the record $145.2 billion that the industry earned in 2006.

Cry me a river. Poor poor banks indeed...

that makes me sad

Their greed landed them in this situation in the first place, so I have no sympathy for them.

Profits might not be as high as they were, but I'm sure 99.9% of banks are still making a decent amount of money.

it's not done yet

When did banks become a for-profit business, committed to making a profit over the service of their customers? All the same, I can't feel bad for them. If they stuck to standard / traditional banking practices they wouldn't be in the mess they're in today.

I never realized until now that only making 105billion as a profit for a year was a negative outlook on your business or industry.

Now the bar has been raised higher for me to be happy with what i earn each year..... bastards....

Fees are too low. RAISE THE FEES!

Yay -- time to sock account holders with more bullsh&t fees!

And thus began the Great Credit Union Migration of 2008. At least, that is the way I wish things would turn out. Banks can kiss my rear, especially after abusing it for so many years before I joined my credit union.

"In case you were wondering, this is why your credit card interest rate suddenly jumped and you just paid $3 at an ATM."
See....now it's this kind of stupid crap that perpetuates the notion that somehow it's consumer behavior that results in higher fees - like "my insurance rates are higher because of all the fraud" or something. Pure crap. Banks charge what they can get away with, period.

Yep... those ATM fees will see another boost soon.

get ready for those end of the month lump fees that you are not notified about at the atm when you take out that cash.
also watch your CC int% rates CC co are raising them if you have a high balance or even no balance and pay of time.
Banks are try to recoup the $ that they are losing.

Not a bad run at all, imo. Just like everything else in life, I'm willing to bet that the banks fees will remain the same even after banks start to make record profits.

@kenblakely: i completely agree....the other post about people who return an item as renting it...saying thats why companies "have to" charge more...bullshit its all worked into the overhead and they aim to make as much as they can before you go somewhere else...capitalism...maximize profits

Two words: Credit Unions.

"We shall overcome... we shall overcome."

a profit is still a profit... the banks can STFU and cry me a river.

Join a credit union and screw banks.

@taka2k7: But if we do that, those who do not leave the banks will be further penalized for not just socking all of their cash and bullion under their mattresses. And then what will we tell the children!?!?!?

Well, maybe the CEOs will have to take 10% pay cuts this year... you know, take home $90M this year instead of $100M. Oh, but how would they be able to feed their families and put roofs over their heads with only $90M ?!?

@aaron8301: But if they follow your advice over a 10-year period, then those same CEOs will be down to annual salaries of less than $35MM. And then their trophy wives will have to think about finding employment over at the Galleria!

Banks profit by providing liquidity to capital markets.

In other words, they make cash and investment property available to clients that would be unable to access it normally. Credit revolutionized this country's infrastructure when, for example, the payment plan on the Model T was introduced. And in case you're the total Internet Obama fans I think you are, credit is the only feasible way to continue to subsidize social welfare spending for health care or social security that doesn't involve privatization. Or just simply denying service.

Lower bank profits - and the consequent lower capitalization at banks - is, largely, bad for consumers who love credit. Virtually all consumers lover credit, so this is bad for virtually all consumers.

Zero % for a year on that flatscreen? Good luck.

Good rate on that mortgage? Not likely.

Cheap bond float on that school system or infrastructure project? Nuh-uh.

Profitable banks mean a lubricated economy, which is good for everyone.

Cry me a freaking river. $105 billion? They gambled, they loset. C'est la vie.

Bring on the fees!

@chrisbacke:

Since the first day they were started? Hate to break it to you, but Citibank doesn't exist because they love you.

@shadow735:

I have no idea what my credit card rates are. Don't care, really, as I never pay interest. I also pay no ATM fees (bank doesn't charge any, and they reimburse any "3rd party" fees). And they pay me 3% interest on my checking acc't balance. Credit union? Nope. Fidelity.

@ADismalScience: Has Denton ever asked you to edit a new business blog for Gawker? If not, WHY?

@scoobydoo:

You need to learn the difference between "earnings" and "profit".

@kenblakely: Maybe banks will get on the "government regulatory compliance fee" train like phone companies. Extra little charges for what they should be taking out of their cost of doing business...

@ADismalScience: Profits are down because risk premiums weren't large enough to offset potential losses from bad loans, because investors believed that buying small pieces of lots of crappy loans somehow made those loans less crappy. If anything, recent losses will force banks to follow better underwriting standards and, hopefully, make loans to borrowers who actually deserve it. They'll keep lending, just perhaps not as promiscuously as before.

@chrisbacke: Banks have always been a for profit business, this is the reason jews have been hated for centuries.

Another perhaps missed quote:

"The industry as a whole is coming off a golden period of record profits. Because of this financial strength, the overwhelming majority of banks and thrifts remain well-capitalized and profitable," Bair said.

This is notable because they're not saying that they're losing money, just that they aren't making the kind of record profits to which they've grown accustomed.

Article Summary: Loaning money to people who can't pay you back results in you not making very much money.

Film at 11.

Wait, isn't it supposed to be all the fault of the irresponsible home buyers taking out bigger mortgages than they could afford? Let's all blame them, and leave the poor innocent banks alone!

@disavow:

The last sentence is my point

Let me reiterate: banks profit by providing liquidity to capital markets. Lower profits are a strong indicator that lending is contracting, which means fewer can access capital.

What's curious is the fact that this is occurring in a period of cheaper money for banks, who borrow much of the money they lend to consumers/industry from the Fed or capitalize it from investors. Capital writedowns have more than offset the liquidity gained from capital created by the Fed's drastic action to provide cash to the markets, which resulted in less money to lend and consequently fewer profits.

I'm new here... please help me understand how the Feds providing extra cash provides less cash.

Legit question... I really want to understand.

@Chad LaFarge:

That's the paradox in the market right now.

Banks have a capital base - proprietary liquid assets that they provide to consumers at profitable rates. The Fed, to an extent, controls the "supply of money" in a variety of ways.

Right now, spiking default rates have led to a sharp diminishing of bank capital bases. At the same time, the Fed is racing this evaporation of liquidity - and losing. More capital is being put under mattresses than to work.