Thong Truong FIN 432 T/Th 2:30 - 3:45 US banking system is experiencing a hard time Although the US economy

has started to recover from the 2008 financial crisis, the US banking industry is still finding its way to get out of the chaos. Major banks has witnessed their profits fall much more than expected. The evidence shows that the profit is just the same levels of 2004 and 2005. To deal with this dilemma, banking industry is now taking a cost-cutting initiative as well as trying to increase its revenue. First of all, they have tried to cut job. UBS has recently announced 3,500 layoffs which is almost 5 percent of its staff. Bank of America also shrink it workforce by cutting 10,000 jobs. Moreover, other big banks/financial institutions such as HSBC, Wells Fargo, Goldman Sach also propose plans to cut jobs. Second of all, banks also try any other ways to cut down their costs. Simplifying their operations or reorganizing the system is the key. For example, Citigroup is executing Project Rainbow which focuses on combining many other different computer networks so that they will run on only one network. At Bank of America, it has hired many experts in the field to help it reorganize its system. Third of all, banks aim at generating higher revenue. One of the most common ways that many banks are having right now are the new fees for automatic deductions from checking accounts that pay any recurring charges such as utility and cable bill. In addition, banks also charge usage fee for new debit card customers in some state which is the case of Wells Fargo. Other banks such as Bank of America or Chase have cancelled rewards programs. In short, although US banking industry is now facing dilemma, it has managed to find some solutions. One thing that needs attention is that during the crisis, the government has to spend a lot of money helping the banking industry revive. It is the too big too fail problem. The Congress must have a law that break up investment banks based on their functions. Investment functions must belong to investment business as well as banking function belong to banking business. It encourages the banks

Thong Truong FIN 432 T/Th 2:30 - 3:45 operate more effective because the poor performance bank cannot survive since there is no help from the government.