Alexandria Ocasio-Cortez could probe banks’ earnings

By: John C.

Freshman Congresswoman Alexandria Ocasio-Cortez is now a member of the House Financial Services Committee, which oversees the nation’s banks and financial institutions. And California Congresswoman Maxine Waters is chairing that committee.

And I think it’s going to be a hoot.

Ocasio-Cortez has already proposed taxing very rich people at a 70 percent rate. And bankers would be the ones stung by a proposal like that — which, incidentally, is stupid and is never going to happen.

But what I like most about the Democrat from California and the one from Queens — who shocked the political establishment when she won the primary last year and then the election — is that the pair might take the opportunity to look into how banks report their earnings.

And once people point out the accounting tricks, Ocasio-Cortez and Waters can really get some TV airtime jumping up and down. For instance…

• Goldman Sachs just had the worst trading revenue since the financial crisis yet reported good earnings by getting its tax rate down to 16 percent because of the tax law changes. The rate is going to jump in 2019.
• Bank of America had solid earnings growth thanks to aggressive stock repurchases. When a company repurchases stock, it helps its earnings per share look better.
• Meanwhile, Wells Fargo’s revenue declined, but the company offset the bad news by arbitrarily cutting its provisions for bad loans by 20 percent. There’s a whole lot more to look into.

Banks have more leeway to manipulate their earnings by temporarily changing their tax rates, raising and lowering their provisions for bad loans and buying back more stock than other companies do.

That’ll give Waters and Ocasio-Cortez plenty of ammunition to hold hearings, make speeches and give press interviews. It’s going to be a great year for people like me who need to fill columns.