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: http://dealbook.nytimes.com/2013/07/12/jpmorgan-quarterly-earnings-surge-31-percent/

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 http://www.usatoday.com/story/money/business/2013/07/11/second-quarter-bank-earnings/2509117/ 

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?