http://norris.blogs.nytimes.com/2009/07/16/a-great-time-to-be-a-banker/ A Great Time to Be A Banker July 16, 2009, 12:38 pm The earnings announcements by Goldman Sachs and JPMorgan Chase â along with the impending bankruptcy of CIT â show this is a great time to be a banker. If, that is, you donât have a lot of toxic waste on your books. Or, to be more precise, if you can act like you donât have such waste. It is a great time because competition is down and profit margins are up. You can borrow with a government â well, an F.D.I.C. â guarantee. There are pesky populists who canât understand why an industry that would have collapsed but for government largess now sees no reason not to return to the days of bonuses in the tens of millions per banker, but they can be ignored. One labor union official I know was muttering something about âI could make a lot of money if the Fed would lend money to me for nothing,â but he is just jealous. CIT, alas, has a lot of bad loans on its books. So, it appears, do a lot of smaller banks around the country with large exposure to commercial real estate. So there may be a lot more blood to come. CIT, and those banks, were reckless during the boom. They probably were not as reckless as A.I.G., but A.I.G. had the wisdom to threaten the financial system if it went down. CIT is just too insignificant to save. Now A.I.G. people also get big bonuses, which just proves that success comes from failing, if you fail big enough. The more small lenders that fail, the better the news for those who can stay in business. The less competition there is for lending, the better the profit margins. One area where there is less competition is in credit cards. Andrew Martin reports in todayâs Times on the anger felt by small stores over the rising fees charged by banks to merchants who take credit cards. They want the government to put a cap on the fees. I have another idea: Make it clear that credit-card companies cannot force merchants to pass the fees on to their customers â This coffee is $1.50 if you pay cash, or $1.79 if you use plastic. If Visa will offer a better deal to the merchant than AmEx does, maybe a Visa purchase should be $1.69. A little price competition would be welcome. But you wonât get much competition in the current financial system. The bailout has enabled banks to stay afloat. But it has not gotten rid of their problem loans and other assets. Instead, Congress forced accounting regulators to give banks leeway to claim assets are worth much more than they could be sold for. The regulators, as Bloombergâs Jonathan Weil points out, still classify CIT as well-capitalized. Of course, so was Lehman Brothers. The obvious lesson to be learned is that the regulators either have no idea what is really going on, or fear stating it. Either way, being told a bank is well-capitalized these days provides you with absolutely no useful information. There is a lack of credit our there, which is one reason banks can charge such nice markups. But that lack is going to hamper anything approaching an economic recovery, which in turn may make the legacy loans and other assets even worse than they otherwise would be. But donât despair. The big bank bonuses could help to move some of those huge homes in Greenwich that were built on spec during the good old days.