国际英语新闻：Goldman, JPMorgan dominate post-bailout Wall Street

NEW YORK, July 23 (Xinhua) -- Goldman Sachs and JPMorgan Chase Co. have emerged two bellwethers of the U.S. finance sector in the post-bailout Wall Street, leading the surge of optimism with their strong profits in the second quarter, said Zhiwu Chen, professor of finance at Yale University's School of Management.

    "A new pattern is laying out on the post-bailout Wall Street, where the two giants Goldman Sachs and JPMorgan Chase are starting to tower over the handful of financial titans," Chen told Xinhua in a recent exclusive interview.

    Six major U.S. banks have reported their second-quarter profits in the past two weeks, vastly beating analyst predictions. However, a thorough analysis should be given on respective report, said the professor.

    The business of Goldman has little to do with common consumers, Chen said. The quarterly earnings of more than 3.4 billion U.S. dollars it had posted were buoyed by record results in its trading and underwriting business.

    According to the quarterly report, the Wall Street giant generated a record 6.8-billion-dollar in revenue from fixed income, currency and commodities trading during the quarter. Revenue from equity underwriting jumped to 736 million dollars from 48 million dollars in the first quarter compared with 616 million dollars a year ago.

    "Goldman has evolved the strongest and most influential financial brand in the U.S. financial sector and it's profit is expected to continue its rally later this year," Chen said.

    JPMorgan Chase, the largest U.S. bank by market value, posted a2.72-billion-dollar earnings, and made its profits mainly from investment-banking services including bond and equity trading, and underwriting debt to help companies issue shares and bonds, not commercial loans and consumption credit.

    "There will be more corporations around the world that incline to take risk and rebuild their balance sheets in the recovering market while there will be more equity and bond offerings in the second half that will boost the trading and underwriting business of the investment banks," he added.

    Unlike Goldman and JPMorgan, Citigroup, Bank of America and Wells Fargo, the traditional commercial banks, whose business focuses more on consumer credit, mortgage, are still struggling to return to health.

    Citigroup and Bank of America reported a profitable quarter Friday, but much of it was based on one-time gains. Bank of America cut partially its holding in China Construction Bank while Citigroup sold off some of its stake of the Smith Barney brokerage, each for billions of dollars.

    "The one-time gains can not form a sustainable support for earnings. With management inefficiencies, losses from credit cards and looming situation of consumption lending, the banks will probably lag far behind of their rivals," Chen said.

    Wells Fargo's second-quarter earnings soared 81 percent, hitting a new company record, amid the bank's acquisition of Wachovia but its shares fell as loan troubles continued to mount.

    "As they highly focus on customer credit, mortgage loans, commercial banks will still battle with the real economic turmoil unless the unemployment turns around," the professor said.

    On Wednesday, Morgan Stanley, a major rival for Goldman, said its income plunged 87 percent on charges related to mergers and its repayment of government funds and weakness at its wealth-management and institutional securities businesses.

    "Goldman and JPMorgan Chase are enjoying dominance in the post-bailout Wall Street, while the disparities among the bank giants will probably increase in the future," Chen concluded.