NEW YORK – The six giants of United States banking will see their first trillion-dollar decade. This is not US$1 trillion (S$1.35 trillion) of total revenue; it is pure profit.

Such a haul did not seem possible before the decade began, when Wall Street was the target of a global protest movement and politicians at both ends of the spectrum were seething over bailouts or aiming to break up too-big-to-fail lenders.

The banks swelled instead, outpacing corporate America so handily that JPMorgan Chase, Bank of America and even hobbled Wells Fargo are on track to make more profit over those 10 years than all but a few publicly traded United States companies, according to data compiled by Bloomberg.

Citigroup, Goldman Sachs and Morgan Stanley are not far behind – and together, the six are poised to make even more next year.

While much of the world’s attention was focused on the riches minted by Silicon Valley, banks were gaining momentum. There is more than one reason for the feat: volatility juiced Wall Street’s trading hauls, investment bankers rode a dealmaking boom, and then US President Donald Trump boosted bottom lines by slashing taxes. Likewise, there is more than one reaction across the industry to the milestone.

It is not just the scale of profit that is so startling, though, but the industry’s ability to push through scandals and thrive anew.

Paying for scandals

To get out of the shadow of the global crisis, the banks had to pay. In 2014, Bank of America agreed to a record-breaking US$16.7 billion settlement to end probes into shoddy mortgage practices, passing JPMorgan’s US$13 billion. By then, some banks were mining new veins of profit that got them into trouble.

Employees inside Wells Fargo, under pressure to meet sales targets, set up millions of accounts for customers who had not asked for them, the most famous in a series of scandals that ultimately spanned most of its businesses. In Malaysia, Goldman Sachs finished raising billions of dollars in 2013 for a state-owned investment fund known as 1Malaysia Development Berhad, which was then pilfered by a group including a former prime minister.

The magnitude of profit makes those mistakes look like hiccups. One person whom the industry can thank, Mr Trump, taunted banks on the campaign trail before putting two Goldman alumni in charge of a tax overhaul that helped transform corporate profits. Banks that had been used to paying three in 10 dollars to the government found themselves forking over less than one in five for 2018. Their tax bills went down from there.

That year marked a new intensity for Wall Street’s growth. Banks that had made less than US$70 billion in 2017 made US$120 billion in 2018 – thanks to tax cuts, an uptick in interest rates and surges in retail banking and dealmaking.

The decade was a frothy time to be a banker. Personnel expenses for the six companies, which had hovered around US$148 billion at the beginning of the era before dropping for a few years, jumped to US$154 billion in 2019, never mind that their overall number of employees had actually fallen. Mr Jamie Dimon, the JPMorgan boss who had already become a billionaire, would eventually get such a big pay package that a proxy advisory firm told shareholders to vote against it.

Few things transformed the landscape of Wall Street as profoundly as the Covid-19 pandemic’s arrival in 2020. To avoid economic cataclysm, the government rolled out relief programmes for consumers and businesses, and the Federal Reserve bought trillions of dollars of assets. The market mayhem brought back the volatility that trading floors crave. Corporations lined up to borrow, raise capital or buy weakened competitors.

In early 2020, analysts were writing obituaries for Wall Street’s run of record profits. Instead, the banks helped spark the boom of blank-cheque companies known as special purpose acquisition companies. Later, once regulators got jittery and prices soured, investors were left holding the bag.

Profits in 2021 also had help from an accounting move: The banks felt good enough about the economy, thanks to government intervention, to release some of the reserves they had set aside in case loans soured. The Big Six made more profit in 2021 than in 2013 and 2014 combined. Even when Russia invaded Ukraine this year, the chaos helped traders defy expectations of hard times.

The tally of profits from the past 10 years eclipses the prior decade’s even if one takes into account inflation and big bank mergers during the financial crisis.

Yet other corporate titans, especially in Silicon Valley, did too well for Wall Street to claim a monopoly on success. Apple alone made more than half a trillion dollars. Microsoft, Berkshire Hathaway and Alphabet topped JPMorgan, followed by Exxon Mobil edging out Bank of America and Wells Fargo.

Banks would attribute some of their gains to innovation, after they invested in technology platforms and improved offerings including credit card rewards. They have also helped companies tap capital markets to grow the economy, and they have held on to some of the profit, adding more than US$200 billion to their capital buffers over the past decade to make a repeat of 2008 less likely.

Critics would counter that the banks did not do it alone. Many of them would not have survived 2008 if it were not for taxpayer aid, and those buffers were the result of stiffer capital rules, sometimes enacted over bankers’ strident objections.

Moreover, it was another government intervention that propped the economy up during the pandemic, teeing up those record profits. Some banks have focused on a narrower slice of clients, limiting opportunities for many communities, and have been slow to pass along rate hikes to savers, betting that customers will not flee to smaller rivals.

Ultimately, banks’ fortunes depend on the health of their clients, said top Wall Street lawyer H. Rodgin Cohen, who is now senior chair of Sullivan & Cromwell. Their epic profits will drop “if the economy takes a downturn, a real downturn”, he said. BLOOMBERG