Since President Trump’s election, bank stocks have soared more than 30 percent, with investors thinking the new president will be great for the finance industry.
But a new report by New York state’s fiscal watchdog shows that investors may be too optimistic. Wall Street workers face huge threats, and their employers’ friends in the White House may not be able to rescue them.
The news from state Comptroller Tom DiNapoli at first seems encouraging: Wall Street profits were up “sharply” last year — by 21 percent — and jobs and bonuses are up, too.
The $17.3 billion profit line was a turnaround from the previous three years, when profits had fallen. “The jump in profitability is good news, since the industry generates a significant amount of tax revenue” for New York, DiNapoli said.
But there is less here than meets the eye. A lot less.
Though profits were up, revenues were down. In fact, revenues fell for the second year in a row, by 1.3 percent.
Wall Street banks increased profits only because one huge expense also fell: the billions of dollars they’ve had to pay to the government in fraud and other settlements since the 2008 crisis. Banks are seeing a boost because they’re finally done paying for this mess.
Bank executives should be relieved that this is all over, but.....