Half Of Wall Street Bank Profits Up In Smoke
What a difference a year makes. Louise Story of the New York Times wrote today:
Only a year ago, Wall Street reveled in an era of superlatives: record deals, record profit, record pay. But a mere 12 months later, nearly half of the profits that major banks reaped during that age of riches have vanished.
The numbers are staggering. Between early 2004 and mid-2007, a period of unprecedented wealth on Wall Street, seven of the nation’s largest financial companies earned a combined $254 billion in profits.
But since last July, those same banks — Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley — have written down the value of the assets they hold by $107.2 billion, gutting their earnings and share prices. Worldwide, the reckoning totals $380 billion, much of which reflects a plunge in the value of tricky mortgage investments.
Funny, but the word “tricky” doesn’t really come to mind when it come to describing those mortgage investments. Something with four letters beginning in “c” and ending in “p” seems to be a better fit.
Source:
“Nearly Half of Wall St. Bank Profits Are Gone”
Louise Story
New York Times, June 16, 2008
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