Many US banks continue remain under pressure as the recession rolls on, but some of the larger banks reported strong second quarter earnings, although many banks still are fighting to survive, as the numerous bank closings this year continue.

While many large banks are also struggling, the majority of banks battling to survive are the regional banks. Smaller community banks that are well run continue to do pretty well, but the medium-sized banks are where a lot of the pressure is at, although some small banks have recently fallen by the wayside as well.

The four major banks, JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup all recorded strong profits for the quarter.

JPMorgan Chase increased profits by $2.7 billion; Bank of America and Wells Fargo both enjoyed profits of $3.2 billion, and Citigroup outperformed with $4.3 billion in profits for the second quarter.

Analysts were quick to point out that this was done on the investment bank sied and not on the commercial lending side, which is more of a measure of economic activity and recovery.

For investment bank Goldman Sachs, they saw their profits in the quarter surge by 65 percent from last year at the same time to reach $3.4 billion. 
 
Of course this brings us back to the outrageous bonuses being paid to bank executives which beg the question of whether it’s taxpayer money paying for this while the banks are making huge profits again. This is why the bailout was always the wrong thing to do, and banks – or any business – need to be allowed to stand or fall on their own, and not be propped up ever by taxpayers money.

When you consider that Citigroup was bailed out by being offered $45 billion in taxpayer money, and then turned around and paid  executives $5.3 billion in bonuses, along with Bank of America taking over Merrill Lynch with the backing of the government and taxpayers dollar, also awarding an enormous bonus package of $3.6 billion to their executives, you see something wrong with the picture.
 
The culture of huge bonuses being part of the incentives for the banking community is considered part of the problem banks experienced by executives and employees taking on outrageous risks in order to earn those bonuses.

Many are getting suspicious of the Obama administration because they’re only propping up huge banks so far rather than allegedly attempting to clean up the financial system. Of course government should never be involved in any of this, but since they took it upon themselves to do this, even as resistance from the people continues to grow, at least they could offer up something else than saving the poor performers and reinforcing the poor practices and behavior that helped lead to this crisis.

Why this can happen is the banks have paid back some of the taxpayer dollars, and so are under no obligation to listen to what the government has to say about bonuses. Maybe this will teach the government to keep their noses out of the free market and let things clean up themselves, and the best companies allowed to strengthen and survive.

Even with this second quarter performance, there is still a huge amount of terrible debt coming their way, which has hit the regional banks already; the reason why the regionals performed so badly during that time. That still has a time to clean out of the system, so the huge bonuses and potential negative consequences could still come back to haunt the banks.

The bad debt that is ready to explode is in connection to the banks’ exposure to credit card debt, as well as how much commercial real estate loans are on their books. Those with the most exposure will suffer the worst, and a new crisis could very well be upon them with potentially tens of billions of dollars in charges being forced upon them.

Again, this is why the government needs to stay out of the private sector and the market allowed to clean itself out. If they would have left this alone, the best banks would have emerged out of this even stronger than before, and the weaker and poorly run banks gone out of business or taken over. That is as it should be.