Friday, July 12, 2013

Banking Profits in a Tough Economic Time

Today I read an article online from the New York Times. The headline read JPMorgan Chase Quarterly Earnings Surge 31 Percent. The article goes on to say that the credit (pun intended) goes to "strong gains in the bank's investment banking business, its credit card operations and its mortgage lending division, which is benefiting from steady improvements in the nation's housing markets." So, naturally, I have questions.

The article also stated (my comments are in parentheses):
  • Net earnings for second-quarter (three months): $6.5 billion.
  • Wall Street analysts expectations (a.k.a. crystal ball predictions): $5.47 billion
  • That is "on revenue of $24.84 billion."
  • Revenue was actually "$25 billion compared to $22 billion in the period a year earlier."
Where are my macroeconomics and microeconomics professors when I need them? All I have at this point is big questions, which include:
  1. The bank earned $6.5 billion in three-months. Wow! How did they do that? Where does that kind of money come from and where does it go and why are there any poverty issues in the world?, said the girl with the heart for justice. The article does go on with further explanation, but I'm not completely clear on the banking business. It is tricky for me to interpret what is hocus-pocus (my term) and what is legit. Thankfully, I have heroes like Elizabeth Warren and others watching with a strong grasp of the inner-workings.
  2. Banks make money through lending well and interest. That is obviously the short version of this story. So has JPMorgan Chase built their house upon the shifting sand or on solid ground? Is that even a fair question? How does this impact our national economy and Gross Domestic Product? To quote one of the comments that followed the article, "I'd submit, the percent of GDP made up of "financial services" is a much more ominous symptom of an unbalanced, vulnerable economy."
  3. There are many people in our country still struggling to meet debt obligations for credit, mortgages, student loans, etc. Many of us are still on a short financial leash. So what does $6.5 billion in earnings really mean? There is a disconnect there for me. How does the bank do so well from customers paying mortgages and credit card bills on time, which it states in the article? Is that all due to their mega-bank status? Is greed in operation? Another comment following the article mentioned her Chase account $35 monthly fee if she doesn't meet their requirements for a free account, and also stated there is a fee to transfer funds. [I did not substantiate these comments.]
  4. The bank is down-sizing. So that kind of unfathomable earnings is not enough to sustain current costs of banking. Why not?
  5. Interests rates are rising, so the banks earn more from that, but doesn't that mainly impact the consumer in the long run? How do bankers explain such grand profits?
  6. They credit momentum in housing sales. Foreclosures still clutter the real estate market. Real estates agents are frequently paid in cash. Foreign money is moving through our economy, which is thought to be a good thing, and might be. What is the tipping point with that? What are the risks and benefits? Who is the big player in purchasing property? Where's the action -- commercial or residential?
I have more questions bubbling through my brain, but this is it for now. My gray matter is stretching out its supply and demand lessons and everything surrounding that. My mental capacities are dusting off some old knowledge to filter through my questions. I have watched It's A Wonderful Life many times (wink - as if that is a movie all about loans and banks), had an economics minor in college, and I'm certified to teach economics at the high school level. I should be stronger at quickly dissecting the ins and outs and ups and downs of how a large bank makes this happen. However, that is a slow bumpy road, and I'll need some time to think through and analyze cause, effect, impact, and inspiration.

Unfortunately, I may or may not get a chance to come back and expand this post. I may or may not give it much more thought. That is my biggest question of all. When so many of us haven't got the time to analyze and fight for accountability, and business moves at the speed of light on a grand scale, how can the consumer or citizen protect the common good? The New York Times article made me suspicious, though it appears to be such grand news. It is always good to ask questions. I just wish it didn't take so much time to reason through the complicated world of banking. I will read some other opinions and articles on the banking industry to expand my understanding.

Link to the article and (the best part) people's comments:

And, by the way, "Wells Fargo, the nation's biggest mortgage lender and the #4 bank overall, is expected to see profits climb 12%," according to 

Are you comfortable with those kinds of earnings from a major bank? Do you understand how that works in an economy that is struggling? Is there any mystery or misunderstanding in your opinion?

Monday, July 08, 2013

A Prayer for Congress & Compassionate Immigration Reform

I originally wrote this prayer in November 2010, as my heart cried out to our active, benevolent God on behalf of the Dream act and immigrant students. I refreshed it a bit today and decided to post it once again. My heart aches as we wait on the Lord and on Congress. The House is currently tasked with moving forward, after the Senate passed S744. The House leaders are talking about steps they want to take that seem to miss the point, or at least potentially, intentionally slow down the process. I pray that the Lord will continue to move in the process and the people involved in this time. Let good immigrants come out from the shadows and continue to contribute in ways that make our country a better place. I pray for the pathway to citizenship that works on behalf of those who want to comply.

Lord, we cry out on behalf
Of immigrants throughout our land.
Dispel the myths. Squelch the lies.
Move in the hearts of Americans.
Open eyes to the complexity.
Turn hearts to compassion.

Lord, I pray for progress.
We depend on you for change.
You, the creator of all mankind,
the author of dignity,
the source of love,
help us encourage others to truly see
the neighbor, the stranger,
the power of love over law.

Protect the activists and advocates.
Give them wisdom and strength.
Grant them access to decision makers.
Bless them with love for those who disagree,
And calm those
who divide and destroy.

Help us be patient in the waiting,
Focused on the value,
Kind in our approach,
As we make others aware,
Challenge others to change,
And invite the country to
A renewed perspective, an
American foundational truth.

Please bring reform that keeps families together,
Provides a reasonable path to citizenship.
Grant grace to the good workers.
And most of all, Lord,
Please lead Congress
To take action on behalf of our
Immigrants and our country.

We do not know how You will act.
We come expectantly.
This is the day.
This is the time.
We, the church, must walk on,
seeking You,
To move mightily for justice.