Meltdown time is magic time for Wall Street!

Much of the general public is often perplexed to see how, when the economy and the financial system have the equivalent of a cardiac arrest, as they did in 2008 and again in 2020, Wall Street banks literally go from near-death experiences to becoming even bigger and better than they were before the crisis. The answer isn’t some magical comeback story in which bank executives with ice in their veins turn certain defeat into an improbable victory. The answer is simply, The Fed.

Here is a good example from a December 28, 2020 article in the Financial Times, “Global banks generate record $125bn fee haul in 2020:”

Global Banks made $124.5 billion in fees this year as companies raced to raise cash in order to survive the pandemic. Companies have raised more than $5 trillion in debt this year, setting another record. While multinationals first moved to draw down credit lines in March, they quickly shifted to the bond market to lock in longer term funding.

Consider that statement. Global banks set a record in bond and equity underwriting fees in a year where, for at least a couple of months, it looked as though it would be an epic year in bank balance sheet destruction. In seemingly one moment, corporate America was making a run on the banking system, and then, magically, the situation completely reversed.


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