Following upon the stellar news of Goldman Sachs’ second quarter earnings, JPMorgan Chase announced this week its own bonanza of $2.7 billion in profits for April through June. Even Bank of America and Citigroup posted second-quarter profits of $3.2 billion and $4.3 billion, respectively. The latter two banks, however, are still a long way from standing on the same ground as Goldman and JPMorgan Chase, which are doing so well that they already have paid back their bailout loans from the federal government. Both BofA and Citigroup still owe Washington about $100 billion each.

 

In the case of BofA, the bank’s profits came mostly from Merrill Lynch, the investment bank it purchased last fall with help from the federal government. Trading in financial products, including corporate debt and securities, was the main reason for the bank’s second quarter earnings. Analysts and bank executives warn that the longer term outlooks for Citigroup and BofA are uncertain, due to potential losses from their credit card and home loan businesses. Both reportedly have set aside billions of dollars to cover these troubles that lie ahead.

 

The good news has largely applied only to big banks. Many smaller and regional institutions are still struggling to stay afloat. So far 53 banks have failed in 2009, and officials with the Federal Deposit Insurance Corporation expect many more in the second half of this year.

-Noel Brinkerhoff

 

Two Giants Emerge From Wall Street Ruins (by Graham Bowley, New York Times)

Bank of America's Profit Mainly Due to Recent Deals (by Binyamin Appelbaum, Washington Post)

Citigroup and BofA Profits Aided by Asset Sales (by Michael J. de la Merced, New York Times)

Happy Days for Goldman Sachs (by Noel Brinkerhoff, AllGov)