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All of this underscores to me how important financial reform remains. Profits these big are not realistic and likely are a result of huge risks. I am not saying banks shouldn't be allowed to make money, only that profits this big continue to endanger the stability of our economy. What are your thoughts?
Wednesday, April 21, 2010
Morgan Stanley's Huge Profit
Apparently not only Goldman is making money now. Morgan Stanley recently reported a $1.8 Billion (yes Billion, with a B) profit for the first quarter of 2010. "Morgan Stanley said it swung to a $1.8 billion profit in the first quarter Wednesday, as strong trading revenues boosted the Wall Street firm's latest results." It seems that all of these banks have returned to business as usual. "All of the nation's top banks have come roaring back in the latest quarter, not only turning a profit, but also blowing analysts' estimates out of the water."
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I disagree, I don't think that the size of the profits matter...only how they are getting there. It is their job to take risks, and to make money and if they can do that without selling products doomed to fail than they should be allowed to continue business.
ReplyDeleteThe problem is that we need to make it clear that next time their risks end up going south, they aren't going to a get these big bailout packages. Unfortunately we may have set a precedent for this, thus making these banks even more sure about taking these unnecessary risk...
ReplyDeleteI mean I don't think the profits are unrealistic, these banks are dealing with substantial amounts of money and according to the article Morgan Stanley was on the lower end of first quarter profits with some of the banks pulling in over 3 billion. It might be due to banks taking on risk but if the risk is not all centered around one type of investment vehicle or market and these profits are a combination of a variety of investing activities then I dont see anything wrong with it.
ReplyDeleteIts good that banks are starting to make money again. It means that more people are investing in them and now the banks are taking risk. I don't know if its a great that these banks are taking risks but it shows that they are getting confident again. Hopefully banks will learn to be more ethical with their risk taking.
ReplyDelete"Morgan Stanley said it swung to a $1.8 billion profit in the first quarter Wednesday, as STRONG TRADING REVENUES boosted the Wall Street firm's latest results." (emphasis added)
ReplyDeleteI think this quote sums it up. Just like Goldman, they've been making most of their money with prop trading