Citigroup and Wells Fargo posted strong third quarter earnings on October 17. This news comes three years after the 2008 financial crisis, when the U.S. government issued bailouts to the banks for $45 billion and $25 billion respectively.
Citigroup reported $3.77 billion in earnings for the quarter, a 74 percent increase from a year ago and a 13 percent rise from the second quarter. It posted $20.8 billion revenue for the quarter, a slight improvement from the previous quarter, though the improvement mostly came from an accounting adjustment.
Wells Fargo said that its profits jumped to 21 percent in the third quarter. However, the increased profit was not on par with expectations for the San Francisco-based bank, as Wall Street had forecasted $20.24 billion revenue for Wells Fargo. Its actual revenue amounted to $19.63 billion.
Despite revenues falling short of expectations, both banks are in good positions to continue to rebound from the financial crisis and are projected to steadily improve their earnings.
Junior business major Sean Krysick pointed to the public’s steadily improving opinions regarding the banks as an explanation for the upturns.
“If you compare this year to last year, you can definitely tell that it’s not the fundamentals of the economy, but the perceptions of the economy have improved. Often times in the financial sector, it’s the feelings and speculations that matter,” said Krysick.
Although Americans are still very cautious and uncertain about the economy, the outlook is brighter than it was three years ago.
While the banks are recovering, debate rages on in the U.S. as to whether the bailouts were necessary and justified.
“It was good for the economy,” said junior government and politics and journalism major Chris Leyden. “The U.S. government could not let Citi [and the other banks] collapse. So even if the government didn’t make the money back, it was justified.”
Krysick agreed, but showed reservations about the bailouts.
“The government had to take ownership of over 25 percent of their stocks,” Krysick said. He, like many Americans, fears the government interference. Meanwhile, Citigroup and Wells Fargo are demonstrate the economic advantages of the government interference.