Wall St. Firms Have Already Earned More Under Obama Than During Entire Bush Presidency: Report
Wall Street firms have earned more in profits so far under President Obama than during all eight years of George W. Bush's presidency, according to The Washington Post.
The securities industry earned $82.52 billion in profits during the first two and a half years of Obama's presidency, compared to $77.17 billion total under President Bush, according to data compiled by The Washington Post, giving legs to the claim that even while Obama has publicly denounced "fat cat bankers on Wall Street," banks are now as profitable as ever.
But the discrepancy is in large part due to the $24.75 billion loss within the securities industry during the financial crisis of 2008 -- the last year of Bush's Presidency -- followed by a gain of $49.53 billion during the country's first year under Obama. That was a period when banks felt pressure to pay back bailout money, according to Gerard Cassidy, a banking analyst at RBC Capital Markets, in a 2009 interview with Bloomberg News.
Federal regulators did cave to Wall Street pressure in the aftermath of the Troubled Asset Relief Program, however, according to a report from the program's Special Inspector General. The report alleged federal banking regulators under Obama allowed Citigroup, Wells Fargo, PNC, and Bank of America to leave the government's bailout program early in 2009, even though the Federal Reserve and the FDIC had recommended they spend more time shoring up their assets. The banks had lobbied to leave TARP early in part because they wanted to avoid restrictions on executive compensation, according to the report.
Additionally, some of the Obama administration's aims at curbing excessive Wall Street profits have yet to take effect or even be written, so their direct effect on profitability has yet to be realized.
Nonetheless, major U.S. banks have struggled this year on the whole, with Goldman Sachs reporting its second loss ever as a public company and BofA's stock price plunging over the last ten months. The financial industry has already announced a slew of mass layoffs, and the New York comptroller recently estimated that Wall Street could lose 10,000 more jobs by the end of 2012.
Still, corporations have boomed during Obama's presidency, even as unemployment has remained high. Corporate profits hit an all-time high of $1.93 trillion in the second quarter of 2011, according to the Bureau of Economic Analysis, up from an earlier all-time high in the fourth quarter of 2010. Corporate profits accounted for 88 percent of all economic growth during the first 18 months after the end of the recession, compared to just 53 percent of economic growth after the 2001 recession under Bush.
The Republican National Committee slammed the Obama administration following the Post's story, urging voters on its blog to "Occupy Obama" -- a reference to the Occupy Wall Street movement, which targets bank profitability at the expense of ordinary Americans, among other issues.
CORRECTION: A previous version of this post mistakenly referred to the government's bailout program as the Troubled Relief Asset Program. It is the Troubled Asset Relief Program.