BANKS SQUEEZED BY RATES WSJ’s James Sterngo
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WSJ’s James Sterngold: “Bankers will likely have to wait longer than they had hoped for rising interest rates to make lending more profitable. Mounting fears that Europe will sputter into another recession have sent rates tumbling. … Earnings released this week by some of the largest U.S. lenders show how squeezed big banks have been by low interest rates. That has put a damper on recent talk from bankers about the relief that would come as the economy improves and the Fed prepares to raise rates.
“Without any improvement in lending margins, banks would have to return to cost cutting to keep profits growing. … Bank stocks were hammered Wednesday harder than the overall stock market, as investors, surprised by the sudden plunge in yields, questioned rosy scenarios that had forecast that bank earnings would rise along with interest rates next year. … The moves came as new economic data in the U.S. and elsewhere raise fears that the economy could soften again just as the Federal Reserve prepares to raise interest rates.”
http://on.wsj.com/100Wo5C