The Dow closed today above 10,000 for the first time in a year. One of the big reasons was the Quarterly earnings report from JPMorgan Chase. The bank reported a $3.6 billion profit during the quarter, topping analysts’ estimates by a wide margin. This is good news indeed.
If you remember back to June 26, 2008, Senator Chuck Schumer (D-NY) pushed over the first domino in a long chain by making public a letter to banking regulators questioning the ability of IndyMac Bank to continue to operate. During the next 11 days, depositors withdrew $1.3 Billion from the bank, causing it to fail.
From the LA Times:
The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors’ demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac’s viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts.
IndyMac was the first to fall. Consumer confidence in banks fell and the bad loans forced upon banks by the Community Reinvestment Act and Barney Frank cause a massive meltdown of our financial institutions. This became so serious that Republican Presidential candidate John McCain announced the suspension of his campaign to travel to Washington to address the crisis.
Democratic Presidential Candidate Barack Obama eventually returned to D.C., but was strangely silent on the proposed remedies. He was a spectator, although his campaign attempted to spin his lack of involvement into something it was not.
President Bush pushed through the TARP bill to bail out the banks deemed to large to fail and set in motion his expensive plan to halt the failures.
Before October was over, the Bush rescue plan was buying preferred stock in troubled banks and additional bailout assets were paid out. And we began waiting to see if the Bush plan worked.
Today’s announcement by JPMorgan Chase was proof positive that only 5 months after leaving office, an amazingly profitable quarter began for the formerly troubled bank in June, 2009.
As much of the blame for the meltdown was placed on George W. Bush for failure to oversee things better, so must the credit for the fix be attributed to the former President.
One must wonder if that oversight should include criminal charges against Chuck Schumer and Barney Frank.
This is likely to be the last fix that President Obama can count on from President Bush. The restoration of jobs and loss of jobs is squarely on Obama. And things are not looking too good for the current president.