COLUMBUS, Ohio (AP) - President Donald Trump’s accusation that a federal watchdog has devastated the financial industry is unsupported by the evidence that banks like best: profits.
Trump’s weekend tweet was aimed against the Consumer Financial Protection Bureau, little known by most people until it became the center of a struggle over who’s in charge - a Trump-named acting director or a deputy who was given the same title by a departing chief from the Obama era.
TRUMP’s tweet: “The Consumer Financial Protection Bureau, or CFPB, has been a total disaster as run by the previous Administrations pick. Financial Institutions have been devastated and unable to properly serve the public. We will bring it back to life!”
THE FACTS: The sector is far from devastated.
Federally insured commercial banks and savings institutions reported more than 5 percent growth in the third quarter from a year earlier. Of more than 5,700 institutions reporting, more than two-thirds (67 percent) had year-over-year growth in quarterly earnings. The proportion of unprofitable banks fell. Quarterly net earnings also were up in the second quarter.
Similar earnings growth - 4.9 percent - was reported in 2016. As well, litigation expenses - one possible sign of distress - were down by almost $3 billion at a selection of large banks.
There’s also a longer term measure of health: The Federal Reserve says 34 firms have added more than $750 billion in capital since 2009. That capital essentially is held in reserves that would help the companies weather a future crisis like the 2008 financial meltdown that prompted the bureau’s creation in 2011 and other steps to overhaul the financial sector. Critics of the bureau say it is overbearing. But it has not left the industry in ruins.
The financial crisis was caused largely by reckless lending practices that led millions of Americans to lose their jobs and homes. The Trump administration has argued that the bureau has blocked people’s access to loans and credit, although surveys by the Federal Reserve do not find that to be so.
Associated Press writers Christopher S. Rugaber and Josh Boak in Washington contributed to this report.
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