By Dan Rosenbaum and Dennis Chira
The combination of the $1.9 trillion Covid-19 relief bill signed into law by President Joe Biden earlier this month, along with the rapid rollout of Covid-19 vaccines and the Federal Reserve’s near-term focus on employment over inflation, are going to create a period of unusually high profits for most U.S. banks.
This window will be temporary, perhaps lasting two or three years before profits return to more normal levels.
The quick burst of earnings will give banks an opportunity to finally do what most have been too financially challenged to accomplish: transform their business models to remain relevant in the digital age. They need to buckle down and do this now, with a sense of urgency, even if it means giving a little less back to shareholders in the short-term.