Tuesday, March 29, 2011

Wall Street Profits Surge in 2010

link here to article

The latest GDP figures for 2010 include data on corporate profits. Corporate profits were at a record high in 2010 but all of the gain came from a big increase in financial sector profit which account for 30% of all corporate profits. The financial sector earned this share of corporate profits by providing only 10% of corporate added value. In two years financial sector profits have gone from a $65 billion loss in 2008 to $426.5 billion in 2010. Part of the gain is attributed to the low cost of funds that are obtained from the Fed at almost zero interest.

The banks are worried that financial reform will shift some of its profits to other sectors. For example, if the banks get lower fees for debit card transactions this will shift some of their profits to the merchandize sector.

No comments:

Post a Comment