Two U.S. Treasury secretaries and Federal Reserve Chairman Ben S. Bernanke provided capital and cheap loans to banks during the last three years to help fuel an economic revival. It hasn't worked out.
While those policies benefited Wall Street, they failed to produce a sustained recovery on Main Street, where unemployment remains more than 9 percent. Now the sputtering U.S. economy may sap bank earnings and Wall Street bonuses.
Profit estimates for companies including Bank of America Corp. have been slashed as much as 30 percent following a report showing weaker-than-expected growth in first-half gross domestic product and after the Federal Reserve said it plans to leave benchmark borrowing costs at historic lows for two years. The 24-member KBW Bank Index has dropped 21 percent since July 28, the day before the latest GDP figures were reported, compared with an 11 percent decline in the Standard & Poor's 500 Index.
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