The Washington Post's Zach Goldfarb has a great story tonight illustrating that the financial industry is doing much better than anyone will let on.

The nut of the whole thing is here:

Wall Street firms — either independent companies or the high-flying trading arms of banks — are doing even better. They’ve made more profit in the first 21 / 2 years of the Obama administration than they did during the entire Bush administration, industry data show.

Wow! That's quite a stat.

Goldfarb goes on to talk about how TARP didn't compel banks to lend onto main street, and how banks have even profited in the recession via the handling of unemployment benefits, and the fact that more pensions have been moved from public systems to private systems.

But really, the story (while perhaps technically accurate) is misleading... banks aren't rolling in dough thanks to the recession, and there's nothing about the current environment that's very good for them.

Thankfully Goldfarb included a spreadsheet (which you can download here) for the data he used.

Here are the annual profits and losses he gets for the securities industry going back to 2001:

2001: $13.16 billion

2002: $8.75 billion

2003: $19.26 billion

2004: $12.52 billion

2005: $15.01 billion

2006: $27.26 billion

2007: $5.96 billion

2008 -$24.75 billion

2009: $49.53 billion

2010: $24.81 billion

Through June 2011: $8.18 billion

Now for some reason, the Bush years numbers add up to $77.2 billion, while the post-Bush years numbers only come to $74.2 billion, but that's not why the story is misleading. What matters is that 2008-2009 was very bizarre due to incredibly large swings in the pricing of bank assets.

To demonstrate this, here are two charts (via David Goldman) that offer a reasonable proxy for bank assets around this time.

The first is the ABX Index of Subprime Home Equity AAAs

The next is an index of AAA-rated commercial mortgage backed securities:

The bottom line is that both bottomed in early 2009 (as did the broader market, powerfully)

The fact that Obama came in right in the depths of this, basically within months of the bottom has been interesting from a historical timing standpoint, but it tells you nothing about the intrinsic profitability of banks under Obama and Bush.

The idea that somehow the rebound for the banks has something to do with handling unemployment claims is laughable.

If you want to get a good sense of financial industry fortunes under Obama and Bush, this chart of industry employment is probably better.

Things boomed for a while under Bush. Then they busted under Bush, and it's basically been miserable and contractionary for them ever since.