Big bank outlook: slow and steady
By Mitchell Hartman
Bank earnings for Q2 2015 are up this week: JP Morgan Chase and Wells Fargo report their revenues and profits on Tuesday, July 14; Bank of America on Wednesday, July 15; and Goldman Sachs and Citigroup on Thursday, July 16. Over the past several years, the biggest U.S. banks have been through financial crisis, massive bailouts and multi-billion-dollar lawsuits over their mortgage-lending and investment practices. Now, banks face significantly more regulation and scrutiny than before, restricting how much risk they can take with their own and other people’s money. They have cut back on formerly lucrative proprietary trading as well as investment banking and deal-making activity. Karen Petrou at Federal Financial Analytics says the new regulatory regime, plus tighter underwriting standards, have helped shore up banks’ balance sheets. “The banks are sound,” says Petrou. “They have a lot more capital, they’re holding a lot more liquidity.