Bank of America back in black reports $6.2B in profits

Donny Wise, DC Consumer and Banking Examiner

October 19, 2011

In the consumer experience of the banking world, the loan application process requires proof of income of tax returns or W-2’s for two calendar years, and this requirement is dependent on a consumer’s occupation. Non-recurring income is a banking term for income received on a one-time basis with no possibility of receiving the income again on a consistent basis. This income does include selling of property, winning the lottery, accounting gains, and retirement account liquidation. The banks do not consider this income as pertinent to consider non-recurring income source as a compensating factor in the loan approval process, and the applicant can be declined for a loan request, as this income is not relevant in the consumer’s ability to payback a loan. The banking industry has a different rationale on nonrecurring income when it comes to reporting earnings.

As bank earnings are being reported this week, Bank of America went from a $7.3 billion loss in the second quarter to a $6.2 Billion profit in the third quarter of 2011. As Bloomberg reports, the profits came from accounting gains and the sale of its interest in the China Construction Bank. The bank did report profits on non-recurring income. The same income is not allowed in many cases for consumers to obtain credit, but Bank of America was quick to show a third quarter profit based on the same income. The moral of this analysis is the real financial health cannot be measured on a onetime event, but the overall financial stability of the consumer or business. The bank’s story of financial performance in the third quarter is another reality in overall performance in credit, investments, and consumer demand

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