"Banks Make Record Profits In Second Quarter"
Banks marked another record profit period in the second quarter, clearing $42.2 billion after expenses in the three months from April to June. The figure is the latest confirmation that the financial industry has bounced back far faster than the rest of the economy.
The profit report also underscores the intense concentration of the banking business. More than $4 out of every $5 went to the very largest banks even though they account for less than 2 percent of companies in the industry. That imbalance is a byproduct of consolidation within the financial industry over recent years: Just 12 megabanks control nearly 70 percent of all banking assets in the country, and nearly 90 percent of all bank assets are held by just 82 of the roughly 5,600 banks in the country.
At the same time, banker pay is set to spike up above the 2009 bonus levels that brought criticism on the industry. The banks aren’t just on track to pay $127 billion in compensation and $23 billion in bonuses. They’re also returning to the dangerous compensation structures that helped drive the fraudulent behavior and gambler’s mentality underlying the financial crisis. Top Wall Street executives are now getting as much as 80 percent of their annual compensation in the form of restricted stock. Depending on how those restrictions are written, that could either promote stability and responsible behavior from financial titans or give them increased incentive to inflate the firm’s on-paper value through the same sorts of risky and dishonest schemes that fueled the 2008 crisis.
The resurgence of bank profits stands in contrast to working America’s experience of the Great Recession and ensuing recovery. Recently released data have shown that most Americans now earn less, even before taxes and costs of living, than they did at the end of the recession. The past ten years constitute a “lost decade” for worker earnings despite a nearly 25 percent increase in productivity.