the Voice of
The Communist League of Revolutionary Workers–Internationalist
“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx
Oct 15, 2012
On October 12, two of the biggest banks in the country revealed their third-quarter profits. JPMorgan Chase profits zoomed 34%. Wells Fargo profits zoomed 22%. The banks aren’t suffering a depression like the rest of us!
And what fueled these rocketing profits? Mortgages! Yes, mortgage speculation is here again.
Wells Fargo and JPMorgan Chase together fund over half of the mortgages in the country. JPMC wrote 47 billion dollars in new and refinanced mortgages; Wells Fargo funded a whopping 139 billion.
And why are banks jumping back into mortgages, after that same house of cards crashed in 2008?
First, because the federal government has made it easier to resell their mortgages, bundled as bonds, to investors. The government will guarantee investors against losses. What a deal!
Second, because the banks are borrowing from the Fed at near zero, so when the banks lend out that same money to consumers at 3.36%, their profits per mortgage are now actually greater than before the last mortgage crisis, four years ago!
And third, because the Fed has a new program to buy up and hold billions of dollars of these mortgage-backed bonds. This means the Fed will replenish the banks’ capital while also providing them profit.
The federal bailout of the banks has never ended. It goes on every day. This should not be a surprise to anyone who understands that the government does not run the banks; it’s actually the other way around.