Thanks to government insurers, bank income hits new post financial crisis high.
Stephen Gandel, Forbes
Bank executives ought to be picking out nice holiday gifts for Fannie Mae and Freddie Mac. Financial firms have made a mint this year offloading home loans on the giant government-backed mortgage insurers. In the third quarter, bank profits from that business hit an all-time high.
The huge profit jump comes at a time when the government still needs to decide the fate of Fannie and Freddie, and when many think the companies, which were bailed out by the government in the financial crisis, should be doing more to avert foreclosures. But Ed DeMarco, the head of the government agency that oversees Fannie and Freddie, has resisted calls to lower the amount that underwater borrowers owe on their homes.
Bank profits in general are at a new post-financial crisis high. In the third quarter, U.S. banks earned a collective $37.6 billion, according to the Federal Deposit Insurance Corp., which released new data on Tuesday. That’s up 7% from a year ago. The FDIC’s list of so-called problem banks shrunk to 694, which was the first time that number has been below 700 in three years.