An interesting piece - Banking’s New Normal BY
JAMES SUROWIECKI
“Banks performed
dismally last year, and their 2016 first-quarter-earnings reports show that
this one is off to an even worse start. Returns on equity have fallen. Bonuses
and salaries are being slashed; in the past quarter, Goldman Sachs cut the
amount it set aside for compensation by forty per cent. Payroll is down, too:
banks have eliminated tens of thousands of jobs in the past couple of years and
are now embarking on a new round of severe job cuts. Some of these struggles
can be attributed to short-term factors, such as low interest rates and
unusually volatile markets. But there’s no avoiding the deeper conclusion:
regulations have simply made banking less profitable than it once was. Before
the financial crisis, financial companies (not including the Federal Reserve
banks) accounted for nearly thirty per cent of U.S. corporate profits. By 2015,
that number had fallen to just seventeen per cent.”