Tomahawk, WI 04/15/2014 (Basicsmedia) – The nation’s largest bank, JPMorgan Chase & Co. (NYSE:JPM), reported disappointing 1Q2014 results on Friday including lower profits and revenue.

Wall St Down, Main St Up

Its peer from the West Coast, Wells Fargo & Co (NYSE:WFC), meanwhile beat analyst estimates in reporting a rise in profits even as it reported lowered revenues.

Wells Fargo is the leader in Main St banking activities such as mortgage lending countrywide while JPMorgan had more of a dependence on Wall St focused activities such as fixed-income trading.

As the regulators clamp down on excessive speculation on Wall St, the fortunes of the likes of JPMorgan have been hurt.

Failed Whale?

How bad is the “hurt” to JPMorgan Chase & Co. (NYSE:JPM) from the slight scaling back of the reckless excesses that led to a near financial meltdown? Badly enough hurt for mortgage revenue to drop 42% and fixed-income trading to drop by 21%.

Net income in 1Q2014 fell to $5.27 billion from $6.53 in 1Q2013.

Net income from consumer and community banking was down 25% at $1.94 billion on revenues of $10.5 billion which were down 10% compared to 1Q2013.

While Jamie Dimon has survived a tough year, the bank has had to pony up more than $20 billion in settlements with the Justice Department, Fannie Mae, Freddie Mac, with certain investors for faulty mortgages, and with the government for JPMorgan’s failure to alert the authorities about the Ponzi scheme being operated by Bernie Madoff.

The famous “London Whale” debacle cost JPMorgan Chase & Co. (NYSE:JPM) about $920 million as well apart from the loss of face resulting from an admission of wrongdoing.

East Coast Vs. West Coast

Even as Wells Fargo & Co (NYSE:WFC) appears to be headed to become the largest consumer lender in the country that is not necessarily a good thing. The fears of subprime lending have risen again — particularly in auto loans. Analysts are already sure that the rising growth in auto loans is directly reflective of declining credit quality.

Even though Wells Fargo doesn’t consider subprime auto loans to be particularly worrisome — especially since auto loans as a whole constitutes much less than 10% of its total loan portfolio at $52.6 billion out of a total of $826.4 billion — if things turn sour in consumer lending, if the economy slows down and unemployment rates rise again, loan defaults might rise and Wells Fargo & Co (NYSE:WFC) might find itself suddenly saddled with a lot of loan defaults.

On the other hand, incomes of the East Coast titan might rise to $27 billion a year once multi-billion dollar legal settlements are out of the way.

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