Financial sector's profits plunge a record 59 percent
The Obama administration is moving to regulate the financial industry just as it emerges from its worst quarter in the postwar era.
The financial sector's profits plunged a whopping 59.4 percent in the fourth quarter of 2008, the Commerce Department reported Thursday. That's by far the worst quarterly drop since the government began tracking quarterly profits in 1948. And it follows substantial drops of 7.6 percent and 20.1 percent in the second and third quarters, respectively.
To put that loss in perspective, the sector earned less money than at any time since 1994, when it was far smaller. And that's before adjusting for inflation. After that adjustment (looking at corporate profits from current production), it's the lowest level of profit in any quarter since 1984.
The financial sector is broad, including not only banks, but also stock and commodity brokers, mutual funds, insurance companies, and holding companies. In essence, that's the range of industries that Treasury Secretary Timothy Geithner is proposing to regulate much more directly in testimony before the House Financial Services Committee Thursday.
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