WASHINGTON -- U.S. banks earned more from April through June than during any quarter on record, aided by a steep drop in losses from bad loans.
The Federal Deposit Insurance Corp. says the banking industry earned $42.2 billion in the second quarter, up 23 percent from the second quarter of 2012. CNNMoney additionally reported Thursday that the nation’s biggest banks are expected to hand out more in compensation in 2013 than they did in 2009 -- the final year of the recession -- including $23 billion in bonuses.
On the same day the FDIC announced the record profits, fast food workers across the nation walked off the job in protest of what they see as low wages and poor treatment. The demonstrators are demanding a $15-per-hour minimum wage and protections against retaliation for joining a union.
Hourly wages for nonfarm workers fell 3.8 percent in the first quarter, the biggest quarterly drop since the Bureau of Labor Statistics began tracking wage growth in 1947. Yet CEO pay continues to steadily rise, with total compensation growing by 876 percent between 1978 and 2012.
Banks' losses on loans tumbled 30.7 percent from a year earlier to $14.2 billion, the lowest in six years. And bank lending increased 1 percent from the first quarter. Greater lending helps boost consumer and business spending, leading to more jobs and faster economic growth.
Still, the FDIC report shows that the largest banks continue to drive the industry's profits while smaller institutions have struggled. Banks with assets exceeding $10 billion make up only 1.5 percent of U.S. banks. Yet they accounted for about 82 percent of the industry's earnings in the April-June quarter.
Those banks include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most have recovered with help from federal bailout money and record-low borrowing rates.
Overall, FDIC Chairman Martin Gruenberg said the second-quarter results "show a continuation of the recovery in the banking industry."
One concern is the recent spike in interest rates. Rates have risen since Chairman Ben Bernanke indicated this spring that the Federal Reserve could slow its bond purchases later this year, if the economy continues to show improvement. The bond purchases have kept long-term interest rates low.
Higher interest rates could have mixed impact on banks. On one hand, they make it more expensive for banks to borrow. But they also enable banks to charge more for loans.
"It's a tricky balance to strike," Gruenberg said at a news conference.
Losses on loans fell to the lowest level since the third quarter of 2007. Home equity loans showed the greatest declines in losses.
Another sign of the industry's health is that fewer banks are at risk of failure. The number of banks on the FDIC's "problem" list fell to 553 as of June 30 from 612 in the first quarter.
And so far this year, only 20 banks have failed. That follows 51 closures last year, 92 in 2011 and 157 in 2010. The 2010 closures were the most in one year since the height of the savings and loan crisis in 1992.
The FDIC is backed by the government, and its deposits are guaranteed up to $250,000 per account. Apart from its deposit insurance fund, the agency also has tens of billions in loss reserves.
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08/29/2013 4:50 PM EDT
Working America's Awesome Tumblr Rounds Up Photos From Today's Strikes
If you're looking for a trove of photos from today's fast food strikes head over to this Tumblr created by Working America, a working family advocacy organization.
Here's one photo already featured on the Tumblr via @MOJobsWithJustice:
08/29/2013 4:29 PM EDT
PHOTO: Workers Take To The Streets In Boston
Photo via Matthew Filipowicz:
08/29/2013 4:15 PM EDT
Organizers Claim Fast Food Restaurant Offered To Double Pay To Keep Workers From Walking Out
Advocacy groups claim a Burger King in Raleigh, North Carolina offered to pay workers more if they didn't go on strike. Unrelated to the groups' claims, Burger King told the Associated Press that the company doesn't make "decisions about pay for the independent franchisees that operate the majority of their U.S. restaurants."
08/29/2013 3:42 PM EDT
PHOTO: Fast Food Workers Hold Up Signs Outside Oakland KFC
Photo via California Labor:
08/29/2013 3:20 PM EDT
Former Secretary Of Labor Robert Reich: McDonald's, Walmart Can Afford To Pay $15 Per Hour
Former Secretary of Labor Robert Reich argues in a recent video that McDonald's and Walmart can afford to meet fast food workers' demands of $15 per hour wages.
Robert Reich, who certainly knows a thing or two about labor and economic policy, says it's time for some of the nation's largest employers to start paying their workers a living wage.
In a petition he launched on MoveOn.org on August 26, Reich, who served as Secretary of Labor under President Clinton and is also a Huffington Post blogger, urges corporations like McDonald's and Walmart to increase wages so workers can finally "get a fair share in this economy." The petition, which had 6,956 on Thursday afternoon, is to be delivered to McDonalds CEO Don Thompson and Walmart CEO Michael Duke.
“Your typical employee is now earning $8.25 to $8.80 an hour,” Reich states in the petition. “[Walmart and McDonald’s] can easily afford to pay [workers] $15 an hour without causing layoffs or requiring price hikes.”
08/29/2013 3:14 PM EDT
Striking Fast Food Workers Take Their Message To Downtown Detroit
DETROIT -- Fast-food workers in Detroit were protesting outside their restaurants this morning. But by early afternoon, they had taken off.
The workers congregated in downtown Detroit, marching through the streets waving flags and banners.
Local union leaders were on hand to address the crowd of workers, including Service Employees Industry Union international leader Mary Kay Henry and Marge Robinson, president of SEIU Healthcare Michigan, which says its 55,000 members make up the state's largest local union. -- Ashley Woods
08/29/2013 3:07 PM EDT
Wendy's Worker On Why Some Of Her Colleagues Didn't Strike: 'A Lot Are Scared'
Rynetta Bennett, 23, worked at the Wendy's on Nassau Street. She was scheduled to work today. Instead, she was outside, protesting. She had worked there nearly seven years, but had not yet been promoted to manager. She said she got a ten cent raise about every six months, and no paid vacations. "This is my main income," she said. Many of her fellow workers were supportive of the cause, but decided not to appear with the strikers. "A lot are scared."
08/29/2013 2:40 PM EDT
PHOTO: Fast Food Workers Take To The Streets In Hollywood
Photo via Warehouse Workers United:
08/29/2013 2:23 PM EDT
PHOTO: Workers Protesting In 5th Ave McDonald's
Photo via NY Communities for Change:
08/29/2013 2:07 PM EDT
Hundreds Rail Against Minimum Wage In Chicago
CHICAGO -- McDonald's workers walked off the job during a one-day strike Thursday morning as part of a nationwide movement protesting low wages and labor practices.
Roughly 200 protesters including employees from McDonald's and Walmart and members of the Chicago Teachers Union and the Service Employees International Union gathered outside the Rock N' Roll McDonald's at 600 N. Clark St. in downtown Chicago to rally and state their demands.
"It's an amazing day because we have about 60 cities joining us," Deivid Rojas, communications director for Fight For 15, said Thursday. "The workers were really inspired because they were among the first workers back in April to go on strike. The support from other cities gives them gives them confirmation."
"It's not liveable," Tyree Johnson, who said he's been a McDonald's employee for 21 years, told HuffPost. "I've been dedicated to McDonald's for the past 21 years. I still make $8 an hour."
-- Kim Bellware
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