Friday, January 28, 2011

Nevermind Dodd-Frank….here comes the recovery

In today’s NY Times there was an editorial about whether or not 2010 was a good year for big banks in the US. I would love to give the author credit, however I didn’t see the name mentioned. You can read the article in its entirety here: . The article tells us that with the exception of Bank of America, all of the big banks were profitable in 2010. Then it explains that the numbers are misleading, as all of the bank’s profits were boosted from by large withdrawals of cash reserves set aside to cover losses. Thus, to get a truer sense of a bank’s condition, you need to look at its actual revenue.

The author suggests that although revenues are not what they used to be, this is a good thing because a slower recovery would be a more stable recovery with less future risks. She goes on to state that the new reforms would go even further toward protecting the consumers as well as the US Economy against future meltdowns. It seems from her tone that she is rooting for Obama and the Dodd-Frank Reform Law.

While I could see why some people would be for the reforms and others could be against them, I see a win-win scenario. If the Dodd-Frank Reform Laws are held up, then our banks should grow slowly with less risk to all of us which would be a good thing. If the new laws don’t pass, the banks will be able to take more risks and probably grow faster. This would be a good thing, too. We can’t live in a fear of a future economic meltdown. In either scenario, if the big banks do well, more jobs are created and more homes are brought; or better yet, not abandoned or foreclosed. Either way, it still sounds like we are on the road to recovery, which means everybody wins.

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