The number of banks in financial trouble is at a 17-year high, according to the feds. Lending is way down. But Wall Street firms are doing great, and bonuses are way up.
Numbers released yesterday by the FDIC and the New York State comptroller are a reminder of the gap between the nation's commercial and savings banks (which offer checking accounts, loans and the like) and Wall Street firms (which, among other things, buy and sell stocks and bonds for themselves and their customers).
As of the end of December, there were 702 banks on the FDIC's "problem list." One hundred and forty banks failed last year, and the number is likely to rise this year, the Washington Post says. Lending by banks last year fell the most since 1942, this morning's WSJ notes.
Still, it wasn't all bad for the banks. Their total profits increased for the fourth quarter and for the year, compared with 2008. Their total profits for the year were $12.8 billion.
That sounds like a lot of money, until you compare it to the bonuses that Wall Street firms paid their employees last year: $20.3 billion, according to the New York comptroller. The firms' profits may have topped $55 billion for the year, which would be an all-time record, the comptroller said.
Why the gap? Wall Street firms' profits tend to move up and down with the markets — and last year was a very good year for the markets. Commercial banks' profits , on the other hand, are more closely tied to the broader economy — which, obviously, didn't fare so well last year.