U.S. Bank Profits Drop on Loan Defaults
Government data shows net income for U.S. banks fell by 25 percent last quarter. Nearly half of all banks reported declines in their earnings because so many homeowners are defaulting on home mortgages as well as credit cards and car loans. But on Wall Street investors, desperate for some good news about the economy, picked up on a hint from the Federal Reserve that it may cut interest rates again. That sent the Dow Jones industrial average up more than 300 points.
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STEVE INSKEEP, host:
NPR's business news starts with plunging profits for banks.
Government data showed the income for U.S. banks overall fell by 25 percent last quarter. That's because so many homeowners are defaulting on mortgages and credit card and car loans. Bad economic news like that has had a counterintuitive effect on the stock market this week. If there's bad economic news, it might mean there could be an interest rate cut, and investors desperate for some good news picked up on a hint from the Federal Reserve that it may indeed cut interest rates again. And then Wall Street saw its biggest two-day rally in five years. That sent the Dow Jones Industrials up over 300 points yesterday alone. Transcript provided by NPR, Copyright National Public Radio.
