You can’t have a strong economy without strong banks. That’s why President Bush’s and, later, President Obama’s first attempts to save the economy from a deep recession were focused around bank bailouts. And the fact that the banks have remained weak, despite the government’s efforts, is one of the major reasons the economic recovery has been so slow.
So investors reacted with glee on Thursday when it appeared that at least some of the problems of the major banks could be behind them. Bank of America reported that it earned $1.4 billion in 2011, up from a loss of $2.2 billion in 2010. Earlier in the week, Citigroup had reported that its bottom line had grown to $11.6 billion last year, up 6% from a year ago. Even more striking: Bank of America and Citigroup’s rising earnings came at the same time Goldman Sachs and indeed investment banking in general appear to be struggling.