Banks Report Worst First Half Earnings Since 2008; Goldman Cites Cyclical Factors

The effect of the Dodd-Frank legislation as well as new capital requirements are affecting the banks’ ability to make money at a much greater level than bank executives are willing to admit.
The trend for banks to report lower earnings during the first half of the year over the second goes back to 2005, indicating that banks are in for worse times.
Goldman Sachs chief Lloyd C. Blankfein noted at a luncheon of the Economic Club of Washington that cycles were at work that could not be effectively fought. He said that managing business well during the worst part of the cycle is key. Businesses who fail to do so disappear by the time the cycle turns.
He cited the cyclical effect as the most difficult aspect of asking investors to be patient in waiting for the bank’s turnaround.


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