Bank Earnings Bewilder Wall Street
-- January 22, 2003
Wall Street continues to tout the stocks of major banks, but we told you months ago that bank stocks were in for a major rout. And just look at what's happening!
Yesterday, Citigroup surprised Wall Street with a 37% profit plunge for the fourth quarter. Today, J.P. Morgan Chase weighed in with its own mega-losses. And they have no one to blame but themselves. They can't blame Enron. After all, they are the ones that structured the deals that allowed Enron to hide losses from investors and bide time until the company eventually imploded. They can't blame the SEC, the NASD, and state attorneys general. The banks set up their businesses with inherent conflicts of interest from the start -- conflicts of interest that cost investors trillions.
And finger-pointing and excuses will only get these banks so far. There are many more forces building up that could smash their earnings even more in the months ahead -- including a derivatives blow-up, more major bankruptcies and financial catastrophes, a bursting real estate bubble, and continued havoc in the stock markets. Banks like Citigroup and J.P. Morgan Chase have dodged bullets in the past, but they'll soon be facing the firing squad.
related article: J.P. Morgan, Bank of New York Miss Marks