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On Wall Street, banks are often ahead of the curve, and not in their offices, necessarily, but on the stock boards. Banks were among the first to recover from the crash of 2008, which was a serious enough jolt to topple Bear Stearns and Lehman Brothers, Washington Mutual and Wachovia -- and others.
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With the help of billions of dollars in federal aid, banks returned quickly to making profits just in time for President Barack Obama, Rep. Barney Frank, D-Mass., and Sen. Christopher Dodd, D-Conn., to throw a 600-page, regulatory curve ball at the nation's banking industry. Banks are recovering from that as we speak.
This year, The New York Times pointed out, stocks at the country's largest banks are down 15 percent to 20 percent, while the Dow Jones industrial average has gained 5 percent overall, despite a five-week downturn that started in May.
One of the bank stocks down the farthest among the giants is Goldman Sachs, which is now battling a Senate Permanent Subcommittee on Investigations, which has accused Goldman of making billions of dollars of bets against the subprime mortgage market in 2007, which might be akin to sticking your foot into the aisle as the housing market strolls by carrying a tray of highballs.
The subcommittee points out Goldman had $10.6 billion bet against the market on a day in February and $13.9 billion on a day in late June of that year.
It doesn't get much more public relations, if that can be an adjective, to have testify at a public hearing in opposite directions at once, so that later, having thrown around two stories, you can see which one sticks to the wall and go with that.
"The firm overall had what I would call ... with hindsight a small short," The Wall Street Journal quoted Chief Financial Officer David Viniar as saying.
Viniar also told the subcommittee, "I won't deny it. We ... were short over most of 2007."
Viniar then said, "On a net basis, it was not that large," going back and forth and back again with his assessment: Small, large, small.
The bank is now sticking with small and digging up documents to prove it, the Journal said. No doubt, being perceived as the bank that sold customers long bets while going short themselves is as duplicitous as it gets. That simple betrayal is, frankly, fraud, although banks bet on both sides of a position all the time.
The problem with the industry now: "No revenue growth," said bank industry analyst Andrew Marquardt at Evercore Partners, a New York financial firm.
If banks were making widgets, it wouldn't matter so much, but banks control the grease that keeps everything else rolling. After a quick recovery, with as much cash made possible by the U.S. Federal Reserve that the central bank dared make available, the banks just sat there bobbing in the water.
"Everyone talks about the Fed printing money, but it's pretty easy to see the money is just sitting in the bank vaults, not being utilized," said Jerry Harris, president and chief investment officer at Sterne Agee Asset Management.
In international markets Monday, the Nikkei 225 index in Japan fell 1.18 percent while the Shanghai composite index added 0.84 percent. The Hang Seng index in Hong Kong fell 1.31 percent while the Sensex in India gained 0.24 percent.
The S&P/ASX 200 in Australia fell 0.3 percent.
In midday trading in Europe, the FTSE 100 index was flat, up 0.03 percent, while the DAX 30 in Germany fell 0.31 percent. The CAC 40 in France lost 0.77 percent while the Stoxx Europe 600 fell 0.44 percent.
