NJIT business prof says first-quarter bank profits will soon prove ephemeral

NJIT finance professor Michael Ehrlich predicts that the strong profits reported by banks in the first quarter will soon be followed by more losses. Ehrlich, a market failure expert, notes that the unexpectedly strong profits reported in the first quarter by many large banks were the result of significant accounting manipulation. For some of the banks, these earnings were a crucial addition to their net equity positions at a time when government "stress tests" were evaluating their future viability. With more losses, serious pressure could mount on the Federal Deposit Insurance Corporation, which, of course, insures bank deposits.

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